We all must eat to survive. As a result, there are few relationships more important for the well-being of modern humans than the one between consumers and the grocery stores from which they obtain their food. Prior to the pandemic, few of us gave much thought to this relationship. Grocery stores were open and shelves were well-stocked. As a result of the pandemic, however, both consumer behavior and store offerings were significantly changed. Members of the DotActiv team observe, “The global COVID-19 pandemic has had a significant impact on consumers, their behavior and ultimately their shopping habits. People around the world need to adapt to a new reality, such as changes in discretionary income and shopping priorities. These new personal circumstances drive changes in consumer behavior, attitudes and shopping habits worldwide.”[1]

Grocers have often played a game of catch-up as consumers were forced to adapt to changing circumstances. For example, in the early stages of the pandemic, consumers bought many more cleaning products and shelf-stable foodstuffs than normal. Impulse buying took a hit as consumers made a beeline for essential products. According to the staff at Scorpion Planogram, at the height of the pandemic, “Many [consumers went] to brick-and-mortar stores with specific purchases in mind, whether that meant a large, well-planned grocery trip or an expedition to find a good reusable mask.”[2] They believe the pandemic has made planograms even more important than they were prior to the pandemic. A good planogram not only helps consumers find what they are looking for, it offers grocers an opportunity to present consumers with products they could use but aren’t on their shopping lists. And the planogram for the center store is perhaps the most important of all.

Planograms and the Pandemic

By now, grocers are well aware of how the pandemic has affected consumer behavior and the products they buy. They are also keenly aware of how supply chain snarls have affected the availability of products. As a result, creating planograms during the pandemic has been challenging. Jennifer Gruber, Vice President for Analytics, Insights & Intelligence at Advantage Sales, observes, “The COVID-19 pandemic has upended how, where and what Americans are buying — rendering traditional retail and brand strategies for optimizing product mix and shelf space less than optimal. As many brands continue to grapple with supply chain challenges and grocery retailers strive to fill the sudden increase in online shopping orders through their brick-and-mortar stores, both must rethink their pre-pandemic notions of ideal store-level inventory levels, category management, and maximizing a store’s footprint and linear real estate.”[3] She goes on to discuss some considerations that need to be applied when developing planograms. She writes:

“More than ever, it’s critical for retailers to understand their true role in their customers’ grocery shopping journey. What are they coming into the store for? What are they buying online for curbside pickup or delivery? If they aren’t choosing my store, why? And who are they choosing? It’s no longer optimal to plan space on shopper demand alone. Retailers need to consider a multitude of metrics, including the role of the category in the store and across channels from the shopper’s point of view (do shoppers see it as a convenience or a necessity?), the size of the category and category walk rates at the local level. All of this must be considered with an eye toward shoppers who live around the store — not just those who walk into the store. In many categories, that means rethinking overall space allocation, expanding in some areas and subtracting in others, ensuring broader supply and variety in some and less space and duplication of like offerings in others.”

It’s a lot to think about. In order to adapt to changing circumstances, retailers need to rely on near-real-time data. Historical data is unlikely to provide the answers they need. The DotActiv team explains, “Data-driven planograms can help you to allocate shelf space to products based on sales and syndicated data. It is a visual representation of how products should be merchandised on shelves to maximize sales and efficiency. Data-driven planograms can be considered the link between yourself (the retailer) and the customer. … Ultimately, the purpose of data-driven planograms is to help you to identify and respond to changes in consumer behavior by analyzing sales and units data.” As the world emerges from the pandemic, using data to draw up planograms will be just as important as consumer behavior continues to adapt to changing circumstances. To learn more about how the pandemic is changing planograms, read my previous article on the subject.[4]

Center of the Store

As I noted in my previous article, the center store has always been important to grocers because getting consumers into the center store means they must pass by a lot of products they might not have specifically targeted for purchase. So, it matters — a lot — where products are located in a store as well as where they are placed on the shelf. Ron Hughes, Senior Manager of shopper strategy and innovation at the Coca-Cola Co., explains, “Center store absolutely has an important role to play in large stores, and research shows that this area of the store is a key profit driver — 75 percent to 80 percent of grocery bottom-line profit is contributed by center store.”[5] The fact that the pandemic motivated many consumers to buy groceries online and pick them up curbside meant that center store impulse sales suffered.

On the other hand, grocery journalists Jeff Wells (@JeffWellsWH) and Sam Silverstein (@SilversteinSam) report, “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.”[6] Nevertheless, Wells and Silverstein caution, “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.” To keep the center store relevant, they believe grocers need to stock innovative products and reach consumers whether they are shopping in-store or online. They explain:

“The good news, according to [surveys conducted by Grocery Dive and Inmar Intelligence], 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.”

The surveys also pointed out why a well-designed planogram is important to encourage impulse buying. Wells and Silverstein report, “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.” A well-designed planogram can encourage consumers to look at products that weren’t on their shopping list.

The wild card in center store sales is inflation. Jana Davis, Senior Director of business intelligence at Acosta, observes, “We are witnessing huge pressure on the CPG supply chain this year that may not only impact shelf availability but will also drive up costs that will be passed on from the manufacturer to the retailer to the consumer.”[7] As a result, writes journalist Mark Hamstra (@MarkHamstra), “On the positive side, these supply chain challenges create an opportunity for retailers to rethink center store.”[8]

Concluding Thoughts

It is too early to know whether center store sales will continue to be strong as the pandemic eases; however, the early signs are positive. Journalist Michael Browne (@mbtravel) reports, “Although consumers are no longer engaging in the bulk shopping of the early pandemic, when center store products like household goods, paper products and shelf-stable grocery items were in high demand, current shopping behaviors still reflect the surge in home cooking and eating that originated with COVID lockdowns and continue to boost center store sales — even with most Americans returning to work and school.”[9]

Footnotes
[1] Isabel Wessels, Brian Nyamachiri, Lisa-May Krige, and Robert Stohr, “COVID-19 and Retail: How Data-driven Planogram Generation Can Help You Meet Consumer Demand,” DotActiv, 27 August 2020.
[2] Staff, “The Benefits of Planograms in Merchandising During Covid-19,” 5 August 2020.
[3] Jennifer Gruber, “How the Pandemic Should Change Planogramming (Maybe Forever),” Advantage Solutions, 27 July 2020.
[4] Stephen DeAngelis, “The Pandemic is Changing Planograms,” Enterra Insights, 11 December 2020.
[5] Bridget Goldschmidt, “5 Ways to Keep Center Store Relevant,” Progressive Grocer, 18 December 2017.
[6] Jeff Wells and Sam Silverstein, “Online shopping habits are set to challenge center store’s recent growth,” Grocery Dive, 9 November 2021.
[7] Mark Hamstra, “Pandemic trends, supply shifts impact center store shopping,” Supermarket News, 6 August 2021.
[8] Ibid.
[9] Michael Browne, “SN Trends Report: Center store success continues for grocers,” Supermarket News, 7 October 2021.