Center Store Is Making a Comeback....

And It Could Be the Perfect Time for CPG Innovation

On February 1st you could have rolled a bowling ball down the center store aisle in any grocery store and not hit very many people. Today, and most likely for many weeks in the future, the aisles are more crowded than Chicago’s Mag Mile during Christmas.

The resurgence of center store is good for retailers, and it can also be a great opportunity for CPG innovation.

BC (Before COVID-19)

Before the pandemic, the center of the store was experiencing significant decline. This trend was concerning to retailers since center store represents 75-80% of their bottom-line profit.  The trend was fueled by lack of interest from millennials who avoided what they perceived as less healthy processed food, and instead gravitated to shopping fresh foods on the perimeter (Progressive Grocer, 5 ways to keep center store relevant 12/17).

Center store gained some new life through niche trends in innovation including Gluten Free, Non-GMO, and Keto, but it wasn’t enough to move the overall center store’s profit needle. All this was happening at the same time major categories like cereal, soda and canned soup were being ignored by the shopper – categories that accounted for the majority of center store sales.

AC (After COVID-19)

Due to necessity, and let’s face it, hoarding of shelf stable items, more and more shoppers ventured down the once empty aisles. As they snagged their TP quota, they also discovered new categories, products and new tastes. Interest in baking returned as shoppers took to buying all the flour and yeast to try their hand at making sourdough bread from scratch. What was once something only your grandma bought, instant coffee was introduced to a whole new generation of wannabe baristas who invented cool new whipped coffee drinks at home.

Big CPG companies’ innovation opportunity is to ride the momentum of this re-engagement in center store, while staying focused on some key principles:

Stay relentlessly focused on the consumer and the category

One thing that won’t change - successful innovation must meet an unmet consumer need and be incremental to the category. Retailers won’t be interested in any innovation that doesn’t prove its worth, even if center store is experiencing a resurgence.

Don’t fear flavor

Continue to develop products that are healthy but also more flavor forward. While staying at home, many shoppers began to experiment with new flavors and are more apt to try something new and different.

Value will play a bigger role

With the unemployment rate at an all- time high, shoppers will be more focused on value. Innovation teams will be challenged to validate products that are more premium priced. That said, there will continue to be a role for premium products in the category, but more scrutiny around performance and the perceived value equation.  

If you or your team would like more information on how to launch successful innovation during this AC era,  please reach out to me directly julieb@mission-field.com. We’re here to help with any of your innovation challenges.