The inside aisles of grocery stores continue to be on the outs with shoppers, whose growing preferences for healthier, fresher and local foods have them patrolling the perimeter and bypassing the center of the store. To reverse the trend and reconnect consumers, it’s imperative that companies making shelf-safe foods innovate accordingly, both in and out of the package.
For retailers who earn 70 to 80 percent of their profit from center-store sales, the key to tapping into consumer interest is examining historical notions of how stores are organized and how shoppers are incentivized to move through them, notes growth strategy firm AMG Strategic Advisors in “The Tipping Point for Center Store.”
FOOD FORMULATIONS ARE KEY
“The biggest long-term challenge facing the U.S. food industry is that taste preferences are changing,” declares The Hartman Group’s 2014 analysis “A Recipe for Growth in Packaged Foods.”
Ultimately, “It’s about the food,” the report further states, indicating that more than half of the top 14 branded food and beverage companies experienced less than 1 percent U.S. retail growth between 2012 and 2013.
At a time when brand-promiscuous, label-reading shoppers are hunting for healthy, flavorful and exciting-to-exotic products, many companies are still holding to legacy brands. Some food and beverage companies are now faced with the choice of modernizing nutritional profiles versus not wanting to mess with success, especially for products developed in an era when sugar-salt-fat formulations were the norm.
Makers of hard-hit cereals have tried to adapt, notes The New York Times in the article “In Grocery Stores, the Perimeters Take Center Stage,” with popular on-the-go cereal bars — for consumers too busy to sit down for their morning bowls of flakes — and healthier whole- and multi-grain versions of their flagship products to lure back the health-conscious shopper.
Two other center-aisle categories have led the way for the kind of reinvention that’s required for a successful reversal of fortunes: soups and broths. Both have undergone dramatic nutritional changes, flavor diversification and packaging shifts — and have been rewarded in the marketplace for these transformations.
PACKAGING IS IMPORTANT
Consider sales of ready-to-serve soup, which declined by 6 percent between 2008 and 2011, according to IRI. Major brands, including Campbell, Progresso and others, have been innovating with fresher and healthier formulations, more sophisticated flavors and more modern, lightweight and appealing packaging, including aseptic cartons, pouches, K-Cups and other formats.
The can — the legacy package of soups and many other stagnant center-aisle products, including beans, tomatoes, vegetables and other ready-to-eat meals — is just not as appealing to younger consumers, notes Euromonitor International research analyst Daniel Grimsey in “Will the Stand-Up Pouch Save Packaged Soup?” Millennials are simply more attracted to today’s lightweight packaging of cartons and pouches, according to marketing firm CPG Trends.
“Millennials perceive the most important benefits of carton packaging to be that it is healthier, keeps food tasting fresher and is easy to recycle,” CPG notes in “CPG Marketing Trends: Millennials’ Favorite Food Packaging Designs,” citing the Brand Amplitude study “Millennials Increasingly Judge Food by Its Cover.”
CARTONS ARE GROWING SHARE
Though cans still dominate in the soup aisle, innovations in packaging, flavor and healthy formulations are credited with resuscitating the category, which is now on track to grow by 6 percent to $4.7 billion by 2017, according to Euromonitor in the Food Dive article “Is the Soup Can Dead?” When examining sales data, the roles that flavor and healthy formulation play are clear: Stodgy and high-fat condensed cream soups continue their slide. Meanwhile, ethnic-flavored soups, including chorizo black bean, lemongrass chicken and gingery lentils, are flying off shelves, one element of a grocery explosion that has market-watcher Mintel predicting sales of ethnic foods will grow by 20 percent between 2012 and 2017, notes The New York Times in “American Tastes Branch Out, and Food Makers Follow.”
Broths are another stagnation-to-growth success story. One of the first products to shift from cans to recloseable cartons, canned broth now holds less than 30 percent market share. Furthermore, sales of broth, which have expanded far beyond the old “chicken or beef” flavor lineup to include mushroom, veggie, seafood, lamb and “all natural” formulations, are up more than 5 percent in 2013, according to ScanTrack.
REBRANDING THE CENTER AISLE
Innovative packaging contributes to making the center aisles more appealing to shoppers, who view them as “a place to be avoided,” according to a recent white paper by WD Partners, “The Fundamentals of Aisle Attraction.” In the survey, 1,500 shoppers described the center store as “crowded,” “intimidating” and “confusing.” But packages with billboard-style exteriors sporting strong, streamlined graphics can be easier to read and make shelves appear less cluttered.
Two suggestions from the report that interest food and beverage brands include:
- “Take advantage of the innovation gap.”
- “People like novelty, surprise, permanence and symmetry no matter where they are.”
Differentiated, eye-appealing and clearly labeled packages containing healthier and innovative products are some of what’s needed to help bring shoppers in from the periphery to shop the center aisle of the future. Getting there may require companies to make changes to their products and business models.