Center of store remains relevant
Dec. 23, 2015
by Monica Watrous
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Packaged grocery still contributing to growth, says Nielsen.
NEW YORK – Contrary to common perception, the center of the store is not dead. Comprising grocery, frozen, dairy and alcohol, center-of-store sections have lost 1.6 percent share of total store food spend in the past two years as consumers flock to the produce, deli, bakery, meat and seafood departments for fresher fare. Still, center of store continues to contribute to growth, said Nielsen in a new report.
For the year ended Aug. 22, 2015, center-of-store food sales in the United States totaled $370.5 billion, up $31.5 billion, or a compound annual growth rate increase of 2.2 percent, from 2011.
|Carman Allison, vp of consumer insights, North America, for Nielsen
“We often hear that the center of store is dead or isn’t growing, especially as consumers shift their dollars to perimeter areas,” said Carman Allison, vice president of consumer insights, North America, for Nielsen. “However, the demise of center of store may be grossly overstated.”
Over the past four years, the grocery, dairy and frozen sections posted compound annual growth rate increases of 2.4 percent, 2.8 percent and 0.8 percent, respectively, Nielsen said.
“While not growing as fast as perimeter, the growth is still occurring,” Allison noted.
Not all center-of-store categories are seeing growth, however. Ready-to-eat cereal sales declined by a compound annual rate of 2.1 percent since 2011. During that period, soft drinks fell 0.7 percent, gum is down 3.1 percent, and margarine dipped by 4.3 percent. These declines have been offset by categories with large gains, including salty snacks (up 5.1 percent), “new age” beverages (7 percent), candy (4.1 percent), coffee (8.4 percent), eggs (7.9 percent), yogurt (6.1 percent) and nuts (6 percent).
A key factor driving growth in the center of store is the prevalence of snacking. Six of the top 10 snacks are found in the center aisles, Nielsen said. Additionally, while many shoppers are choosing prepared foods in the deli department, center-of-store categories still account for roughly half of the plate.
Six of the top 10 snacks are found in the center aisles.
To drive continued growth in the center of the store, retailers must understand how to reach shoppers in new locations with products that serve an on-the-go and increasingly diverse population. Additionally, promotional strategies may need to be evaluated, as “the vast majority” of promotions are not profitable, according to Nielsen.
“So while many believe the center of the store is in a depression, it’s important to remember that the sky isn’t falling, it’s just not as sunny,” Allison said.