Study: Retailers realigning more space to consumables

Perhaps nothing is more pressing on the minds of suppliers this time of year than space planning in the constantly changing world of retail.

The disruptive effects of Wal-Mart’s Project Impact, though short-lived in retrospect, are still present on the minds of suppliers vying to get their products on the shelves and keep them in high visibility.

Project Impact, launched in September 2009, reduced the number of products in a store, by reducing shelf space. Part of the effort was to declutter and make the stores more open. The effort also reduced the number of brands and replaced them with private label like “Great Value.” The effort failed when consumers began to leave Walmart stores to find their particular brand in another store. By late 2010, Project Impact was stopped.

Two industry giants specializing in retail insights – Kantar Retail and CROSSMARK – recently released their joint second study since 2010 to give the industry a comprehensive look at the changing allocation of space across the most important retail channels in the U.S.

Each company says it is “keenly engaged in monitoring the direction of the retail industry as it works at the intersections of all trading partners to enhance a fact-based understanding of how to grow and adapt to the constant challenges of retail.”

Know Your Space 2012 includes data for more than 700 stores and found the sense of uncertainty that ran from 2008 to 2010 has been replaced with a careful, but definite trend to re-examine stores and more investment in efficiency as well as multiple shopping platforms — rather than a single standard box that has so dominated the past two decades.

Aside from retailers seeking smaller stores and others adding larger stores, the vast majority are adjusting their product mix, catering to quick limited trips and full market basket shopping in addition to efforts to expand the retail brands through online and mobile platforms, according to the survey.

Over the next two days The City Wire will outline the study results among these important retail channels: Supercenters, warehouse clubs and discount dollar stores.

TARGET FRESH
Two leading mass merchandisers – Wal-Mart and Target – are decreasing floor space allocated to general merchandise in favor of grocery and consumables, according the study.

Between 2009 and the end of 2011, Target remodeled roughly 60% of its discount stores – non-supercenters – into the PFresh format which gives more space to grocery. Roughly 5% of the total store space has shifted with hardlines and softlines, and non-food grocery conceding 4.2% of that lost space to dry grocery, frozen, meat and promotional departments.

SuperTarget also quietly underwent space allocations similar with the PFresh format, but in addition gave significantly more space to cosmetics and secondary businesses.

Analysts say this shift to consumables shows up in terms of sales growth allocated according to floor space. But in the end game, retailers use the low margin commodity draw to get consumers into the store more frequently, hoping they will step across the aisle and also purchase general merchandise at higher margins.

WAL-MART SHIFT
The aisle-crossover continues to be a concern for Wal-Mart as it has become a glorified grocery retailer, analysts say.

Wal-Mart sells more grocery than general merchandise, apparel, entertainment and home offerings combined. In fiscal 2012, which ended Jan. 31, some 65% of Wal-Mart sales came from grocery and health & wellness, while only 35% of sales came from all other general merchandise categories.

While the bulk of sales come from grocery, roughly 57% of space in a Walmart Supercenter is allocated to hardlines and softlines with just 37% of the floor space dedicated to grocery and health & wellness, the survey notes.

After Project Impact, Wal-Mart shifted some 6% of total space away from hardlines and softlines and added to each of the nine grocery categories as well as health & wellness, cosmetics and promotional.

Analysts say Wal-Mart still devotes more room to general merchandise than its proportional store sales justify.

Stephen Quinn, chief merchandising officer for Walmart U.S., said last week that store assortments are improving in terms of general merchandise, which is the key to get shoppers to walk across the aisle. 

He said since adding back fabrics and crafts for moms and fishing tackle and guns for dads the retailer has been pleasantly surprised at how “forgiving the customer” has been.

CHECKOUTS/SIGNAGE
Checkout stations at supercenters were basically unchanged since the first study was conducted in 2008. The report shows supercenters typically have 23 checkout stations staffed and 3 self-check-outs per store.

However; that will change in 2013 at Walmart stores. Last month, Georgia-based NCR Corp. announced it would install 10,000 SelfServe Checkout lanes to more than 1,200 Walmart locations in 2013. Wal-Mart’s expansion of self-service options is an attempt to improve the overall checkout and customer service experience.

“Our customers are shopping differently than they ever have, and were using innovative technologies like self-checkouts to meet their needs, said Jeff McAllister, senior vice president of innovation, Walmart U.S. “Our multiple checkout options give us a unique advantage to provide our customers with the quick, easy and convenient checkout experience they tell us they want.”

The space planning study also addressed signage trends, something supercenters continue to tweak.

Supercenters can seem daunting and typically score lower on overall shopping experiences than smaller formats. In an effort to drive up shopper satisfactio,n improved signage –  overhead and in-aisle – continues at Wal-Mart.

Most notably are “site to store” reminders posted at eye-level across the entire store where consumables are located from baby food and diapers to dog food. This signage reminds in-store consumers these items are also available at Walmart.com.