In grocery stores, the perimeters take center stageNEW YORK TIMES PHOTO
Pat Behuhl, left, and his daughter, Rebecca, shop at Cub Foods, a SuperValu-owned grocery store in Eagan, Minn., last month. As sales droop in the staid center aisles of shelf-stable products in grocery stores, grocers are focusing more on areas like the deli, bakery and produce sections.
EAGAN, Minn. — The doors of the Cub Foods grocery in this middle-class suburban city open onto piles of picture-perfect peaches and nectarines nestled next to jewel-toned plums and grapes.
Around the corner, corn delivered in the morning from a local farm is heaped decoratively on one side of a wide, meandering path that guides shoppers through the produce section and toward the deli counter and sushi bar, where they can catch the aromas of freshly baked breads and doughnuts, a Cub specialty, a little farther away.
“You can pretty much be in Anywhere, USA, in center store, but the perimeter is the fashion side of the grocery business,” said Sharon A. Lessard, chief designer at Supervalu, which operates Cub Foods stores as well as chains like Jewel-Osco, Shaw’s and Albertsons in some markets. “The perimeter is where we can best distinguish ourselves from everyone else.”
By center store, Lessard meant those long, soldier-straight rows of shelves that have long been the heart of the American grocery store but are now showing signs of the grocery equivalent of atherosclerosis. Shopping and eating patterns are changing, and those changes have threatening implications for the food companies whose shelf-stable products have long filled the center store.
Analysts have been surprised by the volume of sales declines over the last two quarters. Heinz reported a drop of 2.4 percent in its second quarter. Kraft unit sales were down 2.8 percent in its first quarter, and Kellogg said its North American volumes fell 1.7 percent in its second quarter.
With center store sales down, the most forward-looking supermarkets are rethinking the allocation of space — shrinking the staid center and expanding the sexy perimeter. In the Eaton Cub, for example, the produce, bakery, deli, meat, seafood and other perimeter areas occupy roughly 40 percent of the store, Lessard said, compared with 20-25 percent of Supervalu stores that have yet to be remodeled.
“There’s been some stagnation in center-of-the-store sales,” said Jeffrey M. Ettinger, chief executive of Hormel Foods. “Frankly, I think those of us who sell products there have been a little slow to innovate, and in the meantime, sales around the store perimeter have been strong.”
Most major food companies have a presence in both the center and perimeter of the grocery store. Hormel, for instance, is firmly ensconced in one of the hottest areas, the deli section, with its Di Lusso line of cold cuts, while General Mills, maker of Yoplait, is engaged in the yogurt wars raging in the refrigerated cases, another sizzling perimeter section.
But food companies are nonetheless concerned at the softening of their business in the center of the store. They are responding with a variety of tactics, like attempts to add pizazz and flair to the products they sell in the center of the store and making acquisitions that give them a better toehold on the perimeter.
Hormel has shortened the cooking time of some of its Compleats microwave meals to 90 seconds and pumped up the flavorings of others — ginger spicy chicken, for one — that it sells in the center of the store. It has also begun tweaking packaging, putting stalwarts like Pizza Toppings in the pouches that consumers are suddenly crazy for.
“We don’t see the center of the store as a problem, even though the perimeter of the store is growing faster in some stores,” said Ian R. Friendly, executive vice president of U.S. retail at General Mills. “You just need innovation to make it exciting to go down the cereal and snack aisles.”
Friendly pointed to two products General Mills introduced last year — 90-calorie Fiber One brownies and multigrain peanut butter Cheerios — as examples of products that will lure today’s shoppers to the center aisles.
“There are other trends going on that are driving the changes you’re seeing,” he said. “It used to be that people got their food pretty exclusively at traditional grocery stores, but there has been a pretty important migration to club stores, supercenters, drugstores, convenience stores and dollar stores, where sales have been growing much faster.”
Stores like Sam’s Club and Target have put pressure on grocery stores to cut prices, while the other outlets offer convenience. It is much easier to buy staples like milk and butter at a convenience store or gas station than to hike all the way to the back of a grocery store, where those items traditionally are stocked — which is why more grocers now have small dairy cases at the front of their stores.
At the other end of the spectrum, Whole Foods and Trader Joe’s have upped the ante by introducing an element of Cirque du Soleil into the grocery business and proving that there are big profits in fresh produce, which was previously considered a risky business.
Shoppers also are shopping differently, retailers and consumer experts say.
“Generally, for grocery and food products, people are shopping much more frequently today than just a few years ago,” said Michael R. Minasi, president of marketing at Safeway. “They’re coming in for a fresh produce transaction, for tonight’s dinner transaction. I think the bigger shift has to do with how people are using grocery stores than with specific categories of food that are on the perimeter or in the center.”
Minasi said Safeway was not deliberately taking space away from the center of the store and reallocating it to perimeter areas. Rather, he said, “we continue to evolve the stores to be more relevant to shoppers and focus on what’s important to them. Right now, that’s health and wellness, and those products tend to be prevalent in the perimeter of the store.”MORE IN World/National BusinessSAN FRANCISCO — Google has resolved a shareholder lawsuit blocking a long-delayed stock split,... Full Story
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