Pam Basciani, group director, retail channel strategy and commercialization for The Coca-Cola Company, discusses how energizing center store makes shopping easier and presents more innovative solutions for shoppers. Highlighting key research, trends and forces impacting the center store, Basciani shares key insights on shopping center store, maximizing beverage growth, optimal merchandising of water, and resources that can impact behavior in the center store.
Q. How would you describe The Coca-Cola Company’s strategy to energize center store today, and how has it evolved recently?
A: In this day and age, it’s absolutely critical to be shopper-centric. We know shoppers are extremely time-constrained and increasingly interested in shopping the perimeter over the center store. The primary goals of our strategy are to make the center store more engaging, to educate shoppers about the offerings in the center store that meet their needs for fresh, convenient solutions, and to offer new items and experiences that keep consumers coming back.
With these challenges in mind, our strategy is focused on making shopping easier and presenting innovative solutions for shoppers. Our initiative has three key elements: store design and layout, merchandising excellence and activation through assortment mix, adjacencies, and digital solutions. Through our Energizing Center Store project, we want to organize the beverage category to make it easier for shoppers to find both their favorite brands and new products based on how they actually shop, ultimately creating a more compelling and rewarding experience for consumers and retailers.
Our research has also highlighted the importance of the end cap for engaging perimeter shoppers with the center store – branded, occasion-based end caps are proven to increase aisle penetration,¹ generate high shopper conversion and have the highest shopper engagement. End caps also allow retailers to merchandise across categories and offer solutions that meet multiple needs at once, such as bundling food and beverage products to provide shoppers with complete meal solutions.
Q. What are the trends and forces impacting the center store strategy?
A: There are three key trends impacting behavior in the center store:
Q. What objectives is the energizing center store strategy meant to attain?
A: Our initiatives are meant to create more solutions – while expanding the variety of beverage options and smaller package sizes – based on key occasions in consumers’ lives. By creating more solutions that meet the needs of shoppers, we’re fulfilling our commitment to be a total beverage system partner for our retail customers, helping them reach their objectives and grow their business.
Q. What does Coca-Cola mean by “beverage aisle reinvention” and what does that entail?
A: Coca-Cola has been working with our retail partners to “win the center store” through our Energizing Center Store (ECS) project. ECS represents our commitment as a Company to provide not just tactical marketing and merchandising solutions for our customers, but also innovative, strategic direction. Using leading industry and proprietary research as the basis, ECS helps our retail customers build moments of inspiration into normal shopping patterns. We help them create unique, delightful retail environments by taking cues from the perimeter of the store in terms of design, beacons, lighting, layout, adjacencies, and merchandising. How the reinvention is actually executed varies by retailer, but we are excited about the opportunity that ECS presents to the channel and our retail partners.
Q. Why does the beverage aisle need to be reinvented?
A: The center store has seen some neglect over recent years as shoppers have favored the perimeter and purchased more fresh foods. Dollars spent shopping the center store have declined in recent years, and shoppers are spending less time in the center store⁹ – 39% of the average trip time is spent in the perimeter, while only 18% is spent in the center store.¹⁰ While 99% of shoppers still purchase items in center store each month, 38% of grocery sales are in the fastest growing shopper segment of balanced baskets in which 55% of their wallet is perimeter and 45% is center store.⁸ In addition, with the fast growth of e-commerce, retailers need to drive traffic through differentiated engagement that makes store experience the most important factor. These changing consumer behaviors can have a big impact on retailer profits. ECS allows our retail partners to take inspiration from the perimeter of the store and invigorate the beverage aisle in the center store.
Q. Does the rest of the industry feel the same way?
A: The industry recognizes the importance of a healthy center store for overall success. In fact, while the center store and perimeter contribute equally to total store sales and growth, the center store generates 75% to 80% of total profits.¹¹
Q. What are the challenges currently in the water aisle and why does it need to be “reorganized”? What is the company’s strategy for doing so?
A: The bottled water category is growing rapidly – the overall category has grown 9.8% in dollar sales in the last year alone.¹² Specifically, the premium segment has grown 20.8% and sparkling has seen 16% growth, with demand being driven by millennials¹² and multicultural consumers.¹³
As sales across the category continue to rise, we are seeing more segmentation within the overall category, with people looking to different water beverages to fulfill different needs. For example, people tend to seek an unflavored sparkling water to complement a meal or snack; they may seek a lightly flavored, unsweetened sparkling water for all-day hydration; and they look for flavored, sweetened water for the occasional treat.¹⁴ At the same time, consumers, particularly millennials, are increasingly time constrained and making shorter shopping trips. Our research shows that when these shoppers enter the water aisle, they are looking for items in a specific category, whether that’s base, premium, sparkling or enhanced water. We see an opportunity for retailers to reorganize the water aisle by category segment so people can easily find what they’re seeking.
Q. How is Coca-Cola involving retailers in all of the above efforts?
A: For suppliers like us, it’s important to understand the changing retail landscape that our retail customers are facing, so we keep our retail partners and their needs at the center of all our strategies. We constantly ask ourselves how our expanding beverage portfolio can help deliver against our customers’ evolving goals, and we are always willing to test and learn from various innovative solutions. We’re currently collaborating with subject matter experts, external partners and global colleagues from design, shopper insights and digital teams to create tools and resources for our retail partners. By equipping our retailers with holistic resources, we partner together to grow and succeed in the fast-paced and evolving grocery landscape.
¹ BAR Research Summary, 2016
² VideoMining GSI Store Panel, Display Deep Dive Report, October 2014 – August 2015, Supermarket Observations
³ iSHOP Survey, Total Time: Aug 2013 to Sep 2014, People: Shoppers Age 16-75, Market: All Channels, Trip Sample: n=26,475
⁴ iSHOP Survey, Total Time: June 2015- June 2016, People: Shoppers Age 16-75, Market: All Channels
⁵ Coca-Cola iSHOP Tracking Study, 12MMT September 2015, Monthly+ Grocery Store Shoppers, Grocery Store Visits
⁶ Grocery Industry Trends 2015, Food IQ
⁷ iSHOP study, 2015 (Aug 2013-June 2015)
⁸ Kantar Retail ShopperGenetics®, 104 weeks ending 10/2014; Acosta 2013; Nielsen 2013, VideoMining.com 2013; Kantar Retail Audit Analysis 6/2015
⁹ Nielsen 2015, VideoMining.com 2015
¹⁰ Kantar Retail Audit Analysis 6/2015
¹¹ Kantar Retail ShopperGenetics, 104 weeks ending 10/2014
¹² Nielsen Scanning | 52 WE Apr 09, 2016
¹³ B3 FY2014, Based on P4W Drinkers of Brand, % Non-White Indices are based on % of Multicultural P4W Drinkers compared to % of Multiculturals in the Total Population Ages 13-65
*Minute Maid Juice Drinks = Minute Maid Lemonade. **Minute Maid 100% Juice = Minute Maid Orange Juice
¹⁴ Dasani Sparkling Focus Group July 2015; Radius, August 29, 2014; 2012 © Kantar Retail, Nielsen Perceptual Mapping, 52 weeks ending 11/30/13