Conventional retailers must rethink their stores and online strategies to satisfy how people want to shop or risk fading into irrelevancy, notes Global Market Development Center (GMDC), a trade association for the General Merchandise and Health Beauty Wellness industries. The association examines proven high-margin opportunities across the center store and how taking a holistic view can pay off dramatically in its next practice report Center Store: Essential for Total Store Growth.
With continued food price deflation, online leakage of impulse categories, and evolving shopper attitudes, retailers in all formats and sizes must be more intentional and intuitive about the adjacency of relevant nonfoods in the perimeter, grocerants, and in-store health clinics to enhance the shopper experience, the association notes.
“The best stores run wellness sections that parallel today’s healthful lifestyle and self-care trends,” said Patrick Spear, president and CEO of GMDC. “Their inline areas for housewares, home, baby, home office, pet and more, infuse the latest technologies and design. And they collaborate with brands that know end-users well while innovating to connect emotionally. It’s these types of strategies that upgrade store image and performance, and win the hearts and minds of today’s consumer.”
GMDC collaborated with Nielsen, Kantar Retail, Acosta, Profitero, Jacent Merchandising, GlobalData, BHDP and RNG to curate robust and actionable insights that reveal how pairing the right food and nonfood can increase sales from 200% to 400%.
“These out-of-aisle strategies will snap historic food-first and food-only cultures to attention by helping retailers navigate the tempest of change in shoppers,” said Mark Mechelse, GMDC’s director of research, industry insights, and communications. “It’s irrefutable that shoppers, led by Millennials, want nonfoods to be as convenient as possible to ease their tasks, and they want it cool and edgy to match their adventurous nature. Nonfood items today are a badge of honor for consumers. It’s truly the way these categories will differentiate themselves in the new world of shopping.”
If all food retailers move shoppers up from three general merchandise purchases per year to four purchases, they would add $500 million in additional sales. These nonfood destinations in center store, perimeter, and front end also suit today’s lifestyles and shopper attitudes, making housewares, pet, baby, personal care, pharmacy, and health/beauty and wellness top categories for bringing shoppers back. Retailers that play offense with nonfoods grow trips, basket size, and store image as satisfying, mission-completing destinations.
Center Store Reimagined
The report conceptualizes a “Center Store of the Future” that is designed to give stores new meaning and purpose by reflecting how shoppers will shop over the next two to five years. More store-in-stores, new mix strategies, health-occasion groupings, and innovative aisle layouts will help the food channel attract a smarter shopper who is seeking an experience and keep them coming back for more. The entire design contains new technologies and identifies consumer “hot spots” that will assist the shopper with ease of navigation and deliver ultimate convenience.
Next practices for unlocking the potential of the Center Store to spark real financial opportunities and raise customer perceptions include:
- Create a manager position over cross merchandising. Give this person the sole authority and autonomy to decide, based on shopper needs, the optimal product pairings and places for cross displays to occur.
- Commit to cross-merchandising metrics. Add label codes to products to denote in-store locations that trigger customer purchases, so successes become repeatable.
- Emphasize categories and services where Amazon struggles. Think of what shoppers would rather see or try, offer innovative solutions not found online, and offer a higher degree of in-store expertise for testing and product demos.
- Offer dieticians and health consultants. Shoppers trust knowledge. As customers engage with food and nonfoods, offer help and advice to eat smarter, healthier, and train associates to have a deeper understanding of community issues and events.