Center Store

When it comes to store design updates, grocers have focused most of their attention on the perimeter in recent years. They’ve revitalized produce, expanded their prepared foods displays, introduced new in-store dining concepts and debuted order-ahead delis.

Center store, on the other hand, with its typically long aisles of packaged products, hasn’t been a hub of innovation. That’s starting to change as retailers, flush with cash from formerly sluggish departments like frozen foods and eager to keep shoppers flowing in, are testing out new design flourishes aimed at making shopping the center aisles more enticing.

According to industry sources, grocers aren’t ready to completely reconfigure the center store just yet. They have too many promotional dollars tied into it and don’t want to risk impeding one-stop shopping. What they are doing is testing out subtle changes like destination departments and new merchandising displays that pique shoppers’ interest and break down traditional barriers between fresh, ambient goods and general merchandise.

Nicholas Bertram, president and CEO of The Giant Company, which has been trying out center store merchandising strategies at its newest locations, said grocers need to be willing to shake up the traditional approach of long aisles piled high with goods.

“What we've learned is that if you stop trying to be cookie cutter in center store, it's amazing what happens,” he said.

Here are several design innovations that grocers are bringing to the center store.

Interrupting those long aisles

The traditional center store configuration centered around tall, lengthy rows of aisles offers shoppers a wealth of options. But design experts say it also can overwhelm them and dampen any drive to discover new products.

“Traditional aisles are designed like freeways,” said Kevin Kelley, principal and co-founder of Shook Kelley, a design firm in the restaurant and grocery industries. “Our goal is to slow shoppers down.”

To this end, retailers are interrupting those long banks of merchandise. Hy-Vee’s new flagship store in Grimes, Iowa, has TV screens in the middle of some center aisles, and in others it’s installed store-branded coolers carrying products like soups, fresh pasta and frozen meals. 

“We're trying to create points of interruption throughout the store,” said Jeremy Gosch, Hy-Vee’s co-chief operating officer.

Sprouts Farmers Market’s new store format, at around 25,000 square feet, doesn’t feature a voluminous center store selection. But executives are still trying to play up top performers and mix up the aisle layout, said Rick Redpath, managing director with Nadel Architects, which designed the new format for the specialty retailer. 

Frozen products, which have been strong performers for Sprouts and other retailers during the pandemic, appear in the center of Sprouts' newest stores in displays that run perpendicular to the other center aisles, interrupting the front-to-back traffic flow.

“Instead of putting frozen all the way in the back or all the way at the front, it’s center and on a cross access with the rest of center store,” said Redpath. 

Grocers don't have to place packaged goods in the center of the store, Redpath noted. For years, Sprouts has put produce in the heart of its shops. Some foodservice-focused grocers like Wegmans are pushing center store shelving to the edges of some stores. In Chicago, Dom's Kitchen & Market puts dining concepts front and center, with packaged goods set off in the margins.

Redpath said retailers should also make sure their center store aisles don't reach too high, as doing so can hide merchandise and create a closed-in feeling for shoppers. 

"Keep the section visible — don't cover it up," he said. "It's counterproductive to have all that high shelving that just buries those areas. If you can, have sightlines that draw the eye to that center store."

Installing destination departments

Some grocers are turning up the volume on key departments like beverages and baby needs by setting up store-within-a-store destinations characterized by wide assortments and attractive merchandising.

Hy-Vee’s Grimes store features a candy shop in the middle of the store, complete with an oversized gumball machine. The store has a home goods destination that runs adjacent to the main block of center aisles where shoppers walk through island displays of kitchenware.

The Giant Company is also carving out destination departments in its center aisles. Its store in Camp Hill, Pennsylvania, that reopened in 2020 features a new pet center with unique gondola merchandising and a branded section for Blue Diamond products, said Bertram. The store also has a baby needs destination complete with diapers, baby food and other items. 

At the company’s location at 2201 Cottman Ave. in Philadelphia, shoppers can find a “global flavors” destination that includes international foods and ingredients pulled in from around the store.

Tanja Ebner, principal with consulting firm Oliver Wyman, said highlighting departments this way can help shoppers easily locate them and make a quick trip. Retailers are also recasting departments around different consumer needs. 

“Something we see is grocers breaking up the department structure and reorganizing planograms and shelves more along customer decision trees and consumer trends,” she said.

Offering digital touchpoints

Amazon Fresh stores feature digital kiosks where customers can ask AI assistant Alexa for help. In 2020, Walmart announced a new store format where shoppers are encouraged to download the company app and use it to navigate stores, learn more about products and use the Scan & Go checkout feature.

These digital touchpoints underscore the opportunity for retailers to infuse technology in their center aisles that boost customer service and shopping efficiency. Gosch said Hy-Vee has added digital kiosks in sections like CBD and vitamins where shoppers may need assistance.

At its Grimes store, Hy-Vee has also placed product search kiosks at the end of select center store aisles.

“We’ve tried to get answers for customers that don’t even know they need a solution and try to help get traffic into those aisles by offering some of those digital solutions,” Gosch said. 

Grocers are also adding scannable tags in center store aisles that help shoppers learn more about the products they're buying. Fresh Thyme Market recently introduced scannable ELI codes in its Natural Living department that provides info on select items. At Hy-Vee stores, shoppers are encouraged to scan QR codes that link to the company's digital circular.

Pulling out center store products to create meal solutions

Many shoppers are still looking to make quick store trips, said Ebner. Offering meal solution displays that combine fresh and shelf-stable products can be operationally complex, requiring close coordination between department managers. But doing so can provide helpful "shortcuts" that inspire customers and help them shop more efficiently, she said.

Lucky California’s flagship store, which opened in May 2021 in Pleasanton, California, has featured recipe displays and has an island that organizes fresh and packaged items along with home goods around home entertaining solutions. In a similar vein, PCC Community Markets stores in Seattle have featured recipe displays tied to its “Shared Values” meals, which rotate monthly and incorporate canned and packaged ingredients to create a four-person meal for around $10.

At The Giant Company’s Riverwalk store in downtown Philadelphia, spices appear directly across from the meat department, and sections like “plant based” combine fresh, frozen and packaged goods into novel departments.

“Instead of fresh versus ambient, you’ve actually got customer solutions and a floor plan that reflects that,” said Bertram.

As store traffic has normalized and shoppers have grown more comfortable with in-store shopping, retailers have also reintroduced sampling programs that display popular products and show consumers how to prepare signature dishes. Redpath said grocers should position sampling stations in front of center store aisles, inviting shoppers to discover new products. Cooking demonstrations, meanwhile, could show customers how to use items in sections like baking, pasta and condiments.

“I think that's a real area that is untapped,” he said. “That could could grow because people in stores are still seeking out advice.”

There’s no reason why retailers can’t create drinking and dining experiences in the center store, too, said Ebner. Some grocers, like The Giant Company and Kroger Marketplace, have set down bars inside or adjacent to their alcohol departments.

“The beer aisle might not be so exciting, but when you combine it with the beer garden, that's a whole different experience,” she said.

Grocery stores have long struggled with how to make their alcohol aisles, with their rows and rows of bottles and brands, less overwhelming to shoppers. 

To that end, H-E-B has added video tablets to approximately 120 stores to help shoppers learn about beer and wine brands to make selections in its alcohol aisles, according to a May 4 press release. 

With this platform, Loop, H-E-B is looking to forge a personal connection between shoppers and the people behind the brands, while also providing information on attributes like tasting profiles, sustainable practice certifications, nutrition and pairing recommendations. 

Loop was brought to H-E-B by the company Looma and looks to make it easier for customers to choose beer and wine while also building on the Texas grocer’s efforts to attract in-store shoppers. 

The platform is interactive and aims to help guide the shopper's journey. For example, the question "How knowledgeable about wine are you?" lets shoppers select "novice," "casual" or "expert" as their response. This prompts additional questions, like if they want a red or a white or rosé wine, according to a video in the announcement.

While in-store video can also bring in incremental advertising dollars, Looma noted in the announcement that Loop aims to focus on company stories and "authentic, unscripted narratives."

Other grocers have also turned to Looma's video solution. Schnuck Markets launched Looma last year, and the technology is also used in Harris Teeter and Lowes Foods stores, per the announcement. 

Grocers' focus on boosting their in-store alcohol departments comes at a time when they have seen sales from beer, wine and liquor categories pour in during the pandemic. 

Late last year, The Giant Company said it plans to test QR codes that shoppers can scan to view product information in the alcohol aisle of more than a dozen Pennsylvania stores. Last fall, Albertsons teamed up with the Napa Valley Wine Academy to offer a proprietary certification program to train its beverage stewards, with the goal of improving the associates' ability to help customers select wine. 

H-E-B has announced other features aimed at elevating in-store experiences. In April, the Texas grocer said its newest store in New Braunfels, Texas, will house its first two-story True Texas BBQ restaurant and also debut its Home by H-E-B department.

Looma, meanwhile, said it plans to continue to grow in the year ahead, with "pilots in progress and scheduled in both new and existing retail partners, within and beyond the adult beverage category," the press release noted

Bashas’ has been carrying local products for nearly 90 years, but in 2021 the Arizona-based grocery chain decided to go all-in on accelerating its sourcing and merchandising efforts. 

In addition to sourcing more products from Arizona, Bashas' redesigned its local shelf tag to say “Local Like Us” alongside the Arizona state flag. “I didn’t think [the tag] was loud enough on the shelf … I just felt like we needed this screaming a little bit louder,” said Steve Mayer, Bashas’ senior vice president of marketing, merchandising and procurement.

The company had long wanted to do more with local products, but sourcing has been difficult, Mayer said. So the grocer partnered up with Forager, a company that helps simplify local sourcing for brands and retailers. 

Bashas’ is not alone in its efforts — and struggles — to boost local products. Other chain retailers, including Meijer and Kroger, have put out calls for local and emerging suppliers, and are ramping up their sourcing and marketing efforts at a time when local has taken newfound urgency during the pandemic. Global supply chain issues have caused major stock-outs, giving smaller brands opportunities to fill the gaps on the shelf, while consumers have turned more attention to local items for a variety of reasons.  

Meanwhile, local sourcing has gotten easier in recent years with the emergence of companies like Forager and RangeMe, founded in 2015 and 2013, respectively, to address grocers’ burdens of finding and vetting suppliers and help brands gain more visibility and access to resources to become shelf-ready. 

"What [retailers] knew as their 'world of local' might not have been the actual full scope of what was available to them,” said Brandon Leong, senior vice president of marketing and growth at RangeMe. 

So while local is not a new trend for retailers, it's gaining more resources and relevancy as companies confront evolving consumer needs alongside new supply chain realities. Retailers are starting to set targets for local campaigns and commit to permanent local sourcing, turning local into "less of a trend and more of a staple," Leong said. 

While usually linked to fresh items, local products are populating shelves alongside private label items as retailers look to diversify beyond national brands. In center store, an area grocers have long struggled to make more exciting for shoppers, local products can boost the treasure-hunt experience within the rows and rows of packaged products, experts say. 

Strengthening connections with consumers   

Recent research shows that grocers are turning to local products to help differentiate their grocery aisles. In a report issued in fall 2021, The Food Industry Association (FMI) noted that 83% of retailers it surveyed said local assortment throughout the store was a popular differentiator, with 58% of respondents rating the approach as highly successful. Of the 300 grocery executives surveyed by Grocery Dive and Inmar Intelligence in October 2021, more said they planned to add more local or emerging brands (53%) to center store than those who said they planned to increase private label (32.7%) within the next two years. 

Local products tap into community pride and consumer desires to support small businesses and also pique consumer interest with the story behind the product. Even small brands that eventually reach national distribution can still tap into their "local hero story," Leong said, giving the example of Anchor Steam Beer, which is made and beloved in San Francisco.

“There is a great fascination on the part of consumers who have felt so distant from their food for so long," Forager CEO Joe Blunda said.

Innovation happens a lot faster with smaller brands, whether it's trying alternative ingredients or trying new packaging, said Andrew Criezis, NielsenIQ's head of product for small and midsize businesses.

Whole Foods Market, for example, partners with local brands to help them develop innovative line extensions, Kelly Landrieu, the grocer’s global coordinator of local and emerging brands, wrote in an email. The grocer has included local products in its yearly report on trends and featured items like Ruby Hibiscus Water and Green Bar Distillery Lavender Bitters & Soda in the grocer’s first-ever Trends Discovery Box, which debuted in October 2021, Landrieu wrote. 

Consumers often equate local products with being healthier for themselves and healthier for the planet, sources said. 

“In the center store, one of the biggest differentiators that's available is 'local' as its own certification of cleaner, fresher, more wholesome foods," Blunda said, adding that "local" adds weight to other claims like "clean" that consumers may be warier of when used by large CPGs.  

Tapping local to meet company goals

As sustainability and diverse sourcing have become key goals for grocers, local sourcing has become a way to tap into both of those initiatives. Local products often have a lower carbon footprint because manufacturing operations are often smaller and products have fewer miles to travel. 

Leong said there's a connection between small brands and diverse owners, whether minority-, women- or veteran-owned. As equity and inclusion issues have surfaced during the pandemic, grocers are putting more pressure on companies like Forager to help them surface diverse suppliers, Blunda said.  

“It's a huge opportunity for CPG because, to be frank, on the fresh side, you can't really flip a switch and diversify that business or that supply chain," Blunda said. 

Kroger aims to invest up to $10 billion in diverse suppliers by 2030 and triple its sourcing from diverse suppliers as part of a 10-part plan to advance diversity and equity it released last fall. In 2021, Kroger held a competition to expand its sourcing from local and regional growers and producers, giving the winners placement on Kroger shelves as well as ongoing business development from the company and its affiliates.

"People that are diverse have different experiences. Therefore they have different perspectives. Therefore, you can get different ideas, and when you have different ideas, that's where you get innovation," said Angel Colón, Kroger's senior director of diversity and inclusion, multicultural development and supplier inclusion.

During listening sessions the grocer held in 2020, Black associates pushed the grocer to focus on improving sourcing diversity — something customers have also been pushing for, Colón said. Kroger works with numerous certified organizations, which often have local chapters, to find diverse brands, including the National Minority Supplier Development Council, the Women's Business Enterprise National Council and the U.S. Hispanic Chamber of Commerce, Colón said.

"What happens many times is many of our diverse suppliers have started local," Colón said, adding Kroger has seen local brands turn into national ones.

Shelf placement can be tricky

In center store, categories that typically have an abundance of local products include honey, sauces and spices, sources said. Snacks and non-alcoholic beverages are the areas where Forager is seeing the most dramatic growth, Blunda said. 

Local products haven’t really gained ground in the frozen section due to limited capacity or within the wellness category due to the limited number of shelf-ready items and branding challenges, Blunda said. Other categories, like coffee, have had mixed results, with the number of local options and sales strength varying among retailers, sources said. 

Whole Foods' local assortment varies by category and city based on product availability and consumer interest, Landrieu wrote. For example, local protein powders and nutrition bars have a higher density in fitness-focused areas.

While center store shelves often don't pose the same space constraints as refrigerator or freezer cases along the perimeter, getting on shelves and gaining prominent placement are still challenges for small brands. In FMI’s report from September 2021, 66% of retail respondents said they were increasing SKU allocation, either in-store or online, of local products — more so than for private label and for organic, gluten-free or health and wellness products. But 68% said they plan to maintain overall space allocation in center store, while 24% plan to decrease it. 

With more maturity and volume, large CPGs often command large sections and pay for priority placement in center store, leaving for other brands the space at the top or bottom, which can be hard to reach and out of sightlines. “If you're a farmer's market all-star, it doesn't really mean that you can make it to shelf," Leong said. 

Getting on shelves can be cost-prohibitive for small brands, with barriers including slotting fees, requirements for brands to commit to providing a certain amount of product, and pay-to-play shelf access, which can cost thousands of dollars, said Criezis of NielsenIQ. In an effort to make shelf placement more accessible for smaller brands, City Feed and Supply, a grocer with two stores in Boston, doesn't charge local suppliers slotting fees.

NielsenIQ is seeing smaller brands make a bigger impact with shorter-term promotions or with end caps, which can grab shoppers' attention. "Promotions can be very effective," even during inflation, he said. Oftentimes, national retailers will do a trial in a region for a small brand for a few months or a year before determining if and how much it will get expanded, he said. Bashas’, for example, will sometimes wait for a reset to add local products, but other times it will do a plug and play — dropping in a product that's not on a cycle, Mayer said.

How much product a local brand can supply can impact not only how many stores it gets into, but also product placement. “If [there's] enough product selection in that category where it's across multiple shelves, then we will try to give them a more premium location," said David Warner, president and co-founder of City Feed and Supply.

Brands said where their products end up in stores varies from grocer to grocer. Amanda Gilman, founder of AMG Snacks in Massachusetts, said she has seen her energy bites merchandised in the snack aisle, the nut section and on end caps, noting she likes the visibility of end caps but they usually have a cost. “If you just go on the shelf and go in with other products, you get a bit lost,” she said.

Kamaal Jarrett, founder of hot sauce brand Hillside Harvest in Massachusetts, said there are several ideal placements for his products, including the international aisle, the meat aisle and hot sauce section, along with secondary and tertiary placement in areas like seasonal grilling displays and among spices.

Navigating pricing

While price and convenience are top of mind for consumers, the novelty of local items helps them stand out. “I think the customer looks at two products — one’s local and one’s not and they’re relatively in the same price — locally usually wins out,” Mayer of Bashas' said. “I think local is very powerful.”

City Feed has found that customers like having choices at different price points, Warner said. Roughly 40% of City Feed's inventory consists of local products, and, within center store, the grocer aims to offer three to four local or regional brands along with one to two national brands, like an organic option and a lower-priced, generic, per product category to serve customers with different price points, Warner said. 

Because consumers tend to equate local with specialty, grocers can often sell local items at premium prices, boosting their margins. Sources said consumers are willing to spend more on local products because they often view them as higher quality and more aligned with specific values. 

While smaller grocers have leaned into the premium pricing of local products, small brands often struggle with having the volume needed to lower costs to compete with larger brands on pricing, which is typically a bigger concern the larger the retailer is, sources said.

Combined with the pricing of products sold online directly to consumers, at farmers' markets and on Amazon, Jarrett said it's important to not create too many changes in pricing across those different channels. 

“What we’re seeing now is we’re having to be cognizant of where we’re playing with price in each channel. We don’t want to alienate folks," he said. "We don’t want there to be too much parity between pricing, but we also don’t want to be at a specialty price point in large retail grocery chains.”

Because local suppliers have a lot of money tied up in their products, it’s important to get their products on the shelf and selling as soon as possible and then get payments out quickly, Mayer said.

Providing more hand-holding 

Though finding and working with local vendors has gotten easier with the arrival of companies like Forager and RangeMe, grocers said smaller brands still need extra assistance. Mayer said Bashas' has had to show them the pack sizes or pick up products as local suppliers have been impacted by the trucking shortage.

Center store, especially, often requires brands to take more steps to become shelf-ready than for the produce department, where the packaging doesn't matter as much, sources said. Becoming shelf-ready requires a long list of steps, including adding insurance, safety certifications, barcodes and nutrition labels. 

“We tend to move slower with opportunities because we just are spread so thin. And I think, buyers and managers are aware of it, and as a result, they don't crucify us for it, but I think us as the business owners are more aware of the opportunity that we're missing out," Jarrett said. 

Once Kroger finds and vets the brands, the grocer has development opportunities, like helping them prep for category manager meetings, offering webinars on business growth and providing coaching, Colón said. In 2021, Kroger created a resource guide for small businesses about getting retail-ready, covering topics like pricing, promotions, supply chain and product development. 

Whole Foods offers low interest loans through its Local Producer Loan Program, which was created in 2006. 

Some retailers, like City Feed, also take time to mentor local brands and help them improve their business. Oftentimes, mentoring involves talking about pricing strategies, packaging, what customers want, what grocers want and general business advice, like "make sure you can pay yourself first," he said. 

Warner said he takes pride in helping local, small brands become successful, like Effie's Homemade, a Massachusetts-based maker of biscuits and oatcakes that now is sold in major grocery chains across the U.S.

“I get a kick out of that," he said. 

Grocers and suppliers have been through the ringer over the past few months battling supply chain strains that have left shelves empty, shoppers frustrated and companies unable to predict with any sort of certainty what items they’ll have in stock from one week to the next. 

Merchandising their way around shortages has been difficult, and research is showing that supply chain woes along with rising inflation are pushing shoppers into alternative stores. But smart, proactive companies are using this opportunity to take a sober look at the ways they do business and consider how they might adjust their strategies long term.

One of the most salient lessons companies seem to be learning is that they don’t need to stuff quite so many different types of products on their shelves. Insiders around the industry have told me over the years that grocery stores are over-SKU’d. It’s the product of decades spent chasing after the latest consumer trends, of overzealous product managers, an overreliance on trade dollars to fuel the business and the irrational fear that a shopper will flee their local grocer if they can’t find that one type of frozen pizza they like.

As manufacturers have pared back their supply capabilities in recent months, grocers have had to follow suit, in some cases cutting back to half their normal selections in categories like pasta sauce, bread, crackers and cereal. 

This could really sting supermarkets that have built up an abundance of choices over the decades. But consumers haven’t gone running for the hills. At Karns Food Stores in Pennsylvania, shoppers have been unfazed by the limited assortments the company has had to put forth in categories like salad dressings and pasta sauces in recent months, CEO Scott Karns told me recently. 

Karns said he's long believed grocers carry too many different flavors, sizes and offshoots of various product brands. He said his management team is taking a hard look at categories like detergent, which features more varieties than people actually buy. He also brought up Hidden Valley Ranch, the popular salad dressing that's expanded its bottle and flavor selections over the years. 

“How many sizes does a consumer really need when most of the sales are all in 16 and 24 ounces of an item like that?" he said. "I think that the industry is going to change coming out of COVID and they're not going to have nearly as many SKUs out there that they have had." 

Heinen’s, the highly respected independent grocer based in northeast Ohio, has also seen that less can be more in some areas. Early in the pandemic, it closed down its salad bars and switched over to packaged salads that helped it recoup a significant percentage of sales in the category, said Chris Foltz, the company's chief innovation officer. Customers still like the custom salad-making experience, though, so the grocer started thinking about ways to bring the salad bar back in a way that could meet that demand but also cut down on the labor costs and product shrink that had weighed down the stations.

Recently, Heinen's piloted a 10-foot salad bar that's half the size of its traditional salad bar and incurs a third of the labor costs. So far, the bars have been a big success, said Foltz, and together with the packaged salad selection account for the vast majority of the sales the traditional salad bars brought in.

"It's really time to rethink some of these things that, traditionally, we wouldn't have rethought," he told me.

During the pandemic, supermarket coffers swelled as people turned to stores for more of their meals. Those habits are waning, however, and sales growth is moderating even as retailers are stuck with the high costs of online shopping. This makes it increasingly important for grocers to focus on profitability.

At the assortment level, this means focusing on their best-performing products and cutting out the ones that aren’t helping lift sales. Grocers have long performed regular audits of their assortments, but this may entail deeper cuts than that.

"It's inevitable that there are going to be fewer aisles and the SKUs on those aisles are going to have to be more productive," John Ross, CEO of IGA, told my colleague Christopher Doering recently.

It also pays to have a more streamlined supply chain these days. As the omicron variant has waned, the war in Ukraine is poised to cause further supply chain pressure, and we may see another coronavirus variant come along that upends the intricate supply systems that flow into grocery stores. 

An abundance of choice isn’t necessarily what shoppers want, either. There’s the concept, popularized by psychologist Barry Schwartz in his book “Paradox of Choice,” that says offering people too many options overwhelms rather than energizes them. Some of the most successful brands in the business these days, including Trader Joe’s, Costco, Aldi and Gopuff, focus on a limited assortment. They curate their selections, and shoppers love them for it. 

Personally speaking, I find the less product clutter I’m confronted with when I shop, the more willing I am to browse and discover new items. When faced with row after row of different selections, I don’t even bother and just go into seek-and-find mode.

What could grocers do without quite so many shelves of products? Plenty. Stores with high online order volumes could carve out space to pick fast-moving products, stage orders and offer services like pickup lockers. 

Retailers could also use the space for the merchandising and eateries they’ll need to stay competitive with restaurants. This includes solutions-focused merchandising like meal bundles, prepared foods and even demo stations. It also includes in-store restaurants, ghost kitchens and other next-generation meal stops for consumers.

Some of the latest and most talked-about store formats in grocery today are focused on attractive merchandising and product curation. Dom’s Kitchen & Market in Chicago, which was founded by two veterans of the supermarket chain Mariano’s, operates small stores where prepared foods and demos are situated at the center of the store instead of row after row of products. 

In Des Moines, Iowa, and a few other cities, Hy-Vee is opening large stores where food halls, general merchandise displays and digital screens are mixed in with grocery aisles. Walmart, meanwhile, recently opened a store in Arkansas called “Time Well Spent” that offers dynamic merchandising displays and QR codes that encourage exploration — an effort that one expert interviewed by sister publication Retail Dive referred to as “solution-based rather than product-based retailing.”

As online shopping increases, consumers will likely grow increasingly willing to automate the purchasing of staple products for home delivery or pickup and look to stores for solutions-based merchandising. Retailers like Ahold Delhaize and Kroger have launched online marketplaces, while Albertsons recently began offering automated replenishment of certain staple products. The Novastore, a grocery prototype developed by Alert Innovation that's a hybrid automated fulfillment center and physical shopping space, promises a future where consumers only shop for fresh products and have robots fulfill the rest.

Making deep, significant cuts to product assortment is probably a scary idea for grocery retailers. But I don’t think these companies should look at this as an overhaul of the way they do business. They're still offering people choice when they have 12 types of olive oil instead of 24. It’s more about finding that sweet spot of assortment for shoppers and experimenting with limited offerings in certain categories. 

It’s also a matter of making stores more attractive places to shop. Grocers sell some of the most sensory-rich products in the entire retail industry. So why hide that fact by continuing to insist on commodity retailing and piling up items like a hardware store? Make space for the meals, product merchandising and other creative ideas that will let the aromas and inspiration flow.

Center store departments that had endured stagnant returns for years roared back to life during the pandemic. Categories like frozen meals, shelf-stable foods and baking ingredients saw double-digit sales growth in 2020 and continued to perform above historic averages in 2021.

That performance might give grocers a false sense of security about the long-term viability of the traditional center store, with its long aisles crammed with packaged goods. But savvy retailers are seeing that they need to bring the center store into the modern era. They’re seeing consumers demand newer, more innovative products. And they’re watching them increasingly shop online — a channel where cheaper prices and faster delivery times for packaged products are just a few clicks away.

So how can retailers keep shoppers engaged with the core of their stores? And how are consumers approaching the center store as the pandemic continues?

To answer these and other questions, Grocery Dive, in partnership with Inmar Intelligence, surveyed 1,000 consumers and 300 grocery executives separately to gauge their attitudes toward this key department and how they’re approaching it.

The good news, according to the surveys, is that shoppers are more engaged than ever with center store. Not only do they find it a relevant place to shop, but they see themselves shopping there even more in the future.

The bad news for most grocers is that consumers are shopping online a lot more, and their local supermarket isn’t the first place they think of when buying their favorite packaged goods through e-commerce channels. 

Meeting the challenge of today’s center store, the surveys suggest, requires an omnichannel strategy. Retailers need to make their center aisles more compelling places to shop. They also need to improve their digital properties, making it convenient for shoppers to add their favorite cereal or bottled drink to an order and also prompting discovery where they can. 

Consumers see room for improvement, and so do retailers. Here’s what both sides have to say about the center store.

What consumers say

One of the top findings stemming from the survey is that shoppers overwhelmingly feel the center store plays a central role in how they shop for groceries. Asked if they feel the center store is relevant to the way they shop today, more than 40% of participants said it "absolutely" is. 

Another 34% indicated they feel center store is "mostly" relevant to their current shopping priorities, while about a quarter said they had little or no interest in those products.

In another promising sign for retailers, the vast majority of respondents expect to buy center store products at least every other week going forward, both in-store and online. Further underscoring the high importance people place on the array of packaged goods that characterize the center store, participants were most likely to indicate that they plan to shop for those products multiple times a week — regardless of the purchasing channel they opt for.

In a sign that many shoppers head to the store with a pre-set shopping list and have little interest in meandering the aisles in hopes of discovering things they don't plan to buy, nearly 40% of participants in the survey chose "I only go for what I need" when questioned about how they shop the center store at brick-and-mortar retail locations.

On the other hand, about 29% of respondents said they like to browse certain center store departments, while about the same percentage indicated they "walk through the majority of center aisles" when going to the grocery store. Just 3.5% of consumers said they don't ever shop the center store.

While consumers in the survey indicated they shop for groceries in physical stores more often than online, the findings underscore the impact e-commerce is having on how shoppers in the United States keep their homes stocked with food and other supplies.

More than half of respondents said they shop for groceries online at least once a week, and the majority of those place an order multiple times a week. Only about 6% said they never purchase groceries through an e-commerce channel.

But in a potentially troubling sign for supermarket operators, the survey suggests that people tend not to think of their local grocery stores when heading online to buy the center store items that anchor their shopping patterns.

Asked where they direct their business when using an e-commerce channel to buy their preferred center store products, nearly 70% of people who participated in the survey said they choose Amazon, Walmart or membership-based retailers like Sam's Club or Costco. Amazon alone accounted for more than 37% of responses.

By contrast, fewer than one in 10 shoppers reported that they choose their local grocery store when placing an e-commerce order for center store staples.

The survey also provides a window into what shoppers would like retailers to improve about their center store offerings and offers clues about what might be turning people off to local grocers' e-commerce services.

More than 60% of participants said they'd like to have access to a better selection of products when shopping the center store in physical grocery stores, and almost as many said they felt the same way about online grocery shopping.

Beyond looking for an improved assortment, a majority of respondents said they would also like to see retailers provide better websites and apps. More than 40% also indicated they feel the product recommendation they receive when browsing for groceries online aren't up to par. And in a reflection of the preference among many shoppers for items from the area where they live, a quarter of respondents said grocers could improve the online shopping experience by adding more local and niche items.

What retailers say

In addition to the consumer survey, Grocery Dive and Inmar also polled 300 grocery executives to get their observations on the center store’s performance during the pandemic and their outlook for the future.

In terms of sales, around a third of retailers said frozen food, which was seeing a revival before the pandemic and has since benefited from eat-at-home trends, was their top-performing department over the past year and their choice to lead sales over the next year. Shelf-stable foods took the second spot among categories and saw more retailers optimistic about its future potential.

Supply-chain disruptions have impacted center store sales and assortment this year, but 78% of respondents said they believe those disruptions will improve over the coming year. Executives are also optimistic that center store sales will continue to increase over the next year, with 35% saying they expect sales to increase a little and 23% saying they expect a large increase.

Eighty-seven percent of respondents said executives at their companies are satisfied with the center store shopping experience at their stores, reflecting a strong belief in the ability of the section to build baskets and boost profitability. An even higher percentage (92%) said they believe their shoppers are satisfied with the shopping experience, which is more or less in line with what consumers said.

Retailers are also aware of the growing challenge that Amazon and Walmart pose to their packaged goods sales. Forty-six of respondents cited Amazon, which has a robust online presence and a growing fleet of grocery stores, as the biggest threat to their center store departments, while 24% cited Walmart, which has a growing online business and massive U.S. store coverage.

To meet these challenges, most retailers said they plan to update their assortments and the configuration of their center stores. More than two thirds said they aim to introduce new merchandising to the section over the next two years, while 57% said they plan on making design changes. 

When it comes to online shopping, retailers rated shelf-stable foods, frozen meals and snacks as their top-selling categories. Although the survey didn’t cover beverages and alcohol, both of those categories have performed exceptionally well during the pandemic, with retailers deploying alcohol delivery as a separate service in some cases.

Asked which among several online enhancements they plan to implement over the next two years, respondents provided answers that were spread fairly evenly across the options. An almost equal number of retailers said they plan to launch special promotions online and introduce an updated website or app for shoppers.

A fair number of respondents also said they plan to implement personalization and auto-replenishment technology — indicating a desire to meet Walmart and Amazon on their own terms.

Aldi and Target’s Favorite Day were the top fastest-growing private label brands by household penetration in the second quarter compared to a year ago, according to a recent report from Numerator. 

Walmart is dominating household penetration, the report found. Out of the top 15 brands by household penetration, Walmart accounted for the top four consecutive ones — Great Value (72.7%), Equate (51%), Marketside (44.2%) and Freshness Guaranteed (40%) — followed by Dollar Tree, Kroger and Aldi, with penetrations just above 30%.

Looking at perceptions among income groups, Numerator found that high-income shoppers have the most favorable opinion of private label — a surprising finding given store brands have long been equated with having value as a lower-cost alternative to national brands.

Among retailer-specific findings, Numerator shed additional light on Amazon’s own brands. While the e-tailer giant has a higher private label share in consumer electronics and home goods, its share among grocery, household and health and beauty products is only 3%, Numerator found. Meanwhile, private label accounts for 14.7% of sales at its Whole Foods Market banner.

Numerator listed the Amazon Basics line, which includes household essentials like bedding, office supplies, cookware and fitness gear, as the third fast-growing private label brand by household penetration in the second quarter compared to a year ago, behind Target’s Favorite Day and Aldi. 

Examining private label trends across channels, retailers, consumer groups and product types, Numerator found that consumer sentiment for private label’s value for money has been consistent in recent years, with 55% of surveyed consumers saying that value has been “excellent or above average.”

Among different income groups, it’s no surprise that more shoppers, regardless of income, have increasingly said that price is more important than brand name as inflation has soared in recent months. While low-income shoppers have consistently said price trumps brand name more so than middle and high-income shoppers, that same group has been less likely to say a desire to save money drives private label purchasing and is also less likely to agree that private label quality has improved over time. 

More middle- and high-income consumers are buying private label products as a cost-saving measure, the report found. 

Numerator’s private label report comes at a time when high inflation and food prices are prompting consumers to trade down and switch from national brands to store ones. 

In the second quarter, private label brands accounted for 32.1% of sales in the club channel — nearly double its prevalence in the grocery channel, at 17.4%. Private label share for that quarter compared to a year ago grew less than 0.2% each in the mass and online channels, to 22.6% and 20.2%, respectively.