Notes on the Store of the Future

Using health and ethnic aisles as a blueprint to design stores by customers instead of product.

kevin-grieve-j1gnUAVf5d4-unsplashTo list a product in the health or the general foods aisle?

That is the question on the minds of many managers of newer brands with “free-from” products, which tout the absence of preservatives, artificial ingredients, gluten, GMOs (the list goes on). It’s also a question on the lips of marketers at legacy processed foods companies, as they begin to toe the health/wellness line and develop their own natural (or less chemical-laden) products.

There’s a clear, and growing, divide between the “health/alternative” and “mainstream” aisles of a grocery store. A brand must choose to sit in one lane or the other, says Michael von Massow, a food economist and professor at the University of Guelph. There are some occasions when a product is allowed to be in both the natural and general merchandise aisles, he says, but it’s rare, as shelf space is simply too valuable and becoming increasingly limited.

“The downside [of a natural foods aisle] is that it does take [alternative brands] away from the main flow,” says Maureen Atkinson, a senior partner at retail advisor J. C. Williams Group. “But if you are in the general aisle, you are going to be compared price-wise against products that [a brand] might consider below [its] standards.”

A similar argument can be made for the controversially named ethnic/international foods aisle that has long been commonplace in many large Canadian grocery stores. It’s one that Momofuku chef David Chang expressed in a recent episode of his podcast The Dave Chang Show, which The Financial Post reported on in an article that questions the segregation of food by ethnicity. In his rant, Chang urges grocers put every and all foods in their category lane, regardless of origin.

“I’m not saying it’s straight racist, that’s not what I’m trying to say. But it is pretty close to it — because it’s values of how we ate years ago,” he told the Post, urging retailers to stop the segregation madness. Loblaws, for one, is phasing out its international aisle in favour of mixing products into the general population sections of its stores.

Brands not in dedicated aisles may be overlooked by people who don’t shop niche aisles, but von Massow believes segregation of goods by “customer” (either by ethnicity or lifestyle), instead of by defined product categories, could be a blueprint for the grocery store of the future. He questions current merchandising methods, believing that “consumers are overwhelmed with choice” and that there’ll be “an evolution of stores targeting specific customers, rather than the current product line-focused sections.”

In the future, similar to how health and international sections are laid out, stores could be designed by customer “clusters,” says Von Massow. Today, clustering is mostly done by product: “I’ve seen stores with yogurt coolers next to granola, rather than making [shoppers] go to a dairy section and a cereal section.”

Dempster’s is an example of a brand that works with grocers to stock its products in non-traditional sections of a store. The company sometimes places its burger buns in the meat aisle, while tortillas are often found in displays beside produce. The strategy also puts the brand in other perimeter sections of the store, which Atkinson says is seeing a lot of excitement these days (she believes the centre aisles will one day cease to exist as shoppers purchase all of their packaged goods online and save visits to the store to pick fresh meat, dairy, produce and ready-to-eat meals).

Grouping items like this is a similar tactic among online sellers, which use a recommendation widget below products, for example on an Amazon product page, showing customers who purchased X also purchased Y, he says. “There will always be general aisles, but clusters of products make a lot of sense. Stores will have a lot of data on what customers buy. This can provide insight. You often see Mexican food in a cluster with the salsa, shells, etc.”

Atkinson says she’s seen unique approaches to aisle assortment – that go beyond category grouping like condiments or cereals  tested on a larger scale at a major supermarket in Europe.

“I have seen where [Netherlands-based grocer Albert Heijn] has attempted to do it by time of day. So you have all of the breakfasts goods in one area, not necessarily the perimeter, but all in the centre aisles and grouped by time of day. But that is a really unusual case and I haven’t seen it replicated. It’s not something that people have latched onto and said, ‘We have to do it this way.’ [Products] still pretty much end up in the same boring category.”

“Grocery stores change very, very slowly,” she adds. “It’s a combination of the grocery store being very conservative in making decisions around grouping stores in a different way. But then I think the brands don’t want to be moved around a lot either. They want to be more predictable and they have their own shelf management protocols as well.”

 Photo by Kevin Grieve on Unsplash