Rapid changes in technology are transforming lifestyles—and shopping habits. As people lead busy lives driven by greater connectivity, they increasingly look for seemingly disparate qualities when deciding what to add to their baskets. Their desires for convenience, fresh foods and budget-friendly options are shifting store dynamics. So some products and aisles are battling long-term struggles while others are thriving. Now, more than ever, the path to brand and store growth requires a thorough understanding of the entire store.
Retailers and manufacturers have traditionally examined product performance and built strategies using views focused on only an aisle or department. But this is not how shoppers see the store. The isolated view makes it difficult to understand how one part of the store affects another. Through a traditional lens, for example, the recent growth of fresh products like deli-prepared chicken or value-added vegetables and the flat or declining sales of center-aisles staples seem to indicate that certain products are “stealing” sales from one another. But this perception is limiting and based on unfounded assumptions.
The fact is, we’re all total store shoppers. For example, the average shopper spends nearly 80% of his or her grocery dollars on center-store products. And even the most fresh-focused shoppers only spend around 30% of their grocery dollars on fresh. Since shoppers use all of the aisles in the store to solve everyday needs, retailers and manufacturers need to better understand how shoppers connect the dots across aisles for meal solutions and everyday eating occasions.
The grocery store is an evolving ecosystem of connected products. Certain categories play a critical role in overall store health, and changes in the performance of such highly connected categories can affect sales throughout the store. As a result, these categories are more valuable to stores based on their connectivity to other products and aisles.
Sales of fresh chicken breasts, for example, have strong positive correlation (greater than 0.5) to 133 categories across the store. Together, those 133 categories account for 56% of store sales. As a result, price increases at the meat case have a ripple effect on sales of other products across the store like pasta and canned vegetables. Even sales of fresh apples, perhaps a less obvious connection, can be traced to sales at the meat case due to their 0.75 correlation with fresh chicken breasts.
A connection-based view of the store helps retailers and marketers strategize beyond a single category and win across consumer needs or meals. Certain categories share a common benefit (convenience, health or craving) or meal (breakfast, dinner or snacking) and can connect across multiple categories by serving the same consumer need. Such benefit- or occasion-based products, called “consistent connectors,” serve as lynchpin categories that can raise sales across various parts of the store.
Orange juice—a consistent connector for breakfast—has a statistical association with sales in both preparation (cereal, eggs and breakfast sausage) and immediate consumption (fresh bagels, deli prepared breakfast and fresh donuts) breakfast categories. Retailers can capitalize on orange juice’s role in filling consumers' needs for both preparing breakfast and grabbing it on the go to drive total store gains for the meal occasion.
Still, categories with lower connectivity across the store are also important and can help retailers boost incremental sales growth. Because growth in categories like fresh bakery donuts, deli-prepared sandwiches or fresh beef roasts is largely independent of other parts of the store, sales gains can be realized without cannibalizing, or taking sales from, other parts of the store.
For manufacturers, low-connectivity products present opportunities to discover uncommon partners and growth opportunities in new parts of the store. Partnering with weakly connected categories provides new opportunities to capture quick trips (deli-prepared foods or fresh bakery desserts), highly seasonal purchases (cherries, whole turkeys or sun tan products), or niche buyer groups (kosher foods or products traditionally associated with Hispanic or Asian cuisine).
Ultimately, total-store connectivity facilitates a unique perspective on how consumers buy across the aisles. With this understanding, manufacturers and retailers alike can leverage their values and shape their stores to better serve consumer needs.