Grocers vs. Big Food Companies for Control of Shelf Space
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Here's your money briefing. I'm J.R. Whalen at The Wall Street Journal in New York. Ever wonder why the big brand name grocery items are pretty easy to reach in the grocery store and you have to bend way down to get the cheaper off brands? That space is valuable to the big food companies.
The best place to be in most cases is the strike zone, as they call it. Slightly below the height of your eye because everyone tends to gaze downward a little bit.
That's Wall Street Journal reporter Annie Gasparro. She'll explain how supermarkets are relying on their own research to take back control of their shelf space rather than taking direction from the big food companies. That's coming up.
Why are big brands losing control of supermarket shelf space?
A walk through the supermarket used to mean shelves stocked with products from the largest companies. They controlled the real estate and dictated where their products were placed. But now the game has changed. Wall Street Journal reporter Annie Gasparro covers the food industry and is on the line with us with details. So Annie, what have supermarkets done to take control of where products are placed on the shelves?
Grocery stores have started to invest a lot of money in data and software that they are working with third-party providers to use to really elevate the science that's behind the shelf wars at the grocery store.
And this is a change from several decades going back, right?
Yeah, the biggest brands really used to draw customers into stores. They were going to the stores to get their Lay's potato chips or their Diet Coke. But now there's all these challenger brands that are newer, they're trendier, and they're the ones driving growth. So the retailers don't rely on the big brands as much anymore. There's still a huge portion of sales, but this is giving the small, trendy brands a chance to... really be in the ear of the retailer executives and influence more of the shelf placement than they ever used to do. And these meetings that they have are for designing planograms is what they call it. And that's how they determine what gets the best placement and what goes next to what.
And it's a really... a really extensive process that you probably wouldn't realize when you're just walking through the aisles of the grocery store.
And a lot of this placement of the products on the shelves has to do with where they are relative to the shopper's eye level.
The best place to be in most cases is the strike zone, as they call it. And that is slightly below the height of your eye because everyone tends to gaze downward a little bit. And if you have that spot in the center of the aisle, that's where you're most likely to get consumers' attention. So everyone wants that spot, and every brand is out there to convince retailers that they deserve it.
What is the walk rate in grocery parlance, and why is that important?
That is measuring how long someone will look for a brand before just giving up and not buying anything. So... If your brand will captivate people to the point that they will spend more than three seconds looking for it, then that's a good sign for your brand. And grocery stores are taking that into account. They can get into these software programs and adjust things like that to show what a difference it would make to put a brand with a longer or higher walk rate in one spot versus another spot. And then they can calculate what that would do to sales of not just that brand, but the entire aisle.
And this new level of research and the use of software has affected numerous big companies, General Mills, for one.
Yes, we looked at General Mills because they have a big presence in the baking aisle with Bisquick and some other brands. And that aisle has been disrupted in recent years by companies a startup called Kodiak Cakes that is selling high protein pancake mix and other items that are higher protein for the amount of carbs. And their stronger sales growth has awarded them more shelf space. And that is upending companies like General Mills that have had a traditional large footprint in that aisle.
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