Sunday, June 1, 2014 | 2:01 a.m.
Grocery store secrets
There’s nothing random in the placement of goods on grocery store shelves: Shelf space is sold; the better the location, the more the store charges for it.
Top shelf: Smaller brands, regional brands, gourmet items. These items are harder to reach and out of customers’ line of sight. These companies don’t have the big bucks to pay supermarkets for prime shelf placement.
“Bull’s-Eye Zone”: The most popular and profitable items. This is eye level for adult shoppers. It is the best grocery store real estate, and manufacturers pay top dollar for it. It’s also called the “thigh to eye” zone. Tip: Skip this section if you are looking for a deal. Cheaper, off-brand versions likely can be found on a lower shelf.
Bottom shelf: Store brand, oversize and bulk items, discounted items. Shoppers are less likely to look this low, so stores place items with low markup here.
Kids’ shelf: The items kids like. Items placed here are eye level for children and easily grabbable. Sellers hope kids will throw these products into their carts and plead with parents until they give in and buy them.
All eyes on you: Think Cap’n Crunch and the Trix bunny are eyeing your kids? You aren’t imagining things. Cornell researchers found that the eyes of “spokes-characters” on boxes of cereal marketed to children point downward. Manufacturers want the characters to look kids in the eye to create a sense of trust and build brand loyalty. Characters or spokespeople on boxes of cereal marketed to adults typically stare straight ahead or slightly upward.
Front to back: Supermarkets typically place essential staples farthest from the door, forcing customers to walk through aisles of non-essentials to get to the items they need. The store hopes customers will get distracted and make impulse buys along the way.
Where do you buy milk? How about chicken, Cheetos and toilet paper?
For Southern Nevadans, there are hundreds of options.
Groceries are big business here, and a glut of food stores are vying for your attention.
Consider this: In a 6-mile swath of Henderson, there are more than 15 supermarkets and grocery stores. Most recently, Sprouts Farmers Market moved in, part of a valley-wide rollout, despite the closing of several Albertsons and Fresh & Easy locations.
Southern Nevada shoppers have more than 150 grocery stores from which to choose. That’s about one for every 13,000 people.
There are traditional grocers, family-owned shops, big box retailers, high-end specialty stores and bulk warehouses.
Six years after the recession put Nevada’s economy in a headlock, Las Vegas’ grocery store market is growing.
And while you might live where the sun beats down, the valley is anything but a food desert.
TOO MUCH OF A GOOD THING?
Considering residents’ wealth of options, you have to wonder: Is it possible to have too many grocery stores in a city? Analysts say yes, but supermarket operators see room to grow in the valley.
Sprouts, for example, recently opened a location in Henderson, with two more – another in Henderson and one in Summerlin – scheduled to debut later this year. And because of a merger with Sunflower Farmers Market, there will be two more Sprouts in Las Vegas before the end of the year. Trader Joe’s plans to open another store in Summerlin later this year, and an expansion of Glazier’s, a family-owned supermarket in southwest Las Vegas, is rumored.
LOCATION, LOCATION, LOCATION
A Texas A&M professor found that when chips and soda were moved one aisle closer together in a grocery store, sales of both increased 0.7 percent. When they were moved one aisle farther apart, sales fell 1.4 percent. And when they were arranged facing each other in the same aisle, sales of both increased 9.2 percent.
Look at a map of grocery stores, and you’ll notice a trend: Chain stores aren’t distributed equally throughout Clark County.
There are few supermarkets within a 3-mile radius east of the Strip. The biggest variety of supermarkets is in Henderson and in Las Vegas’ more affluent neighborhoods.
Why? Operators flock to areas like Green Valley because that’s where the money is. The median income in Henderson is more than $60,000.
In some of the poorer parts of North Las Vegas, where the average income is $34,000, grocery stores are sparse. Residents might find a Wal-Mart, Smith’s or Albertsons, but there often are miles between them.
“The best shoppers are the one who are going to spend the most money,” said Roger Beahm, a marketing and retail expert at Wake Forest University. “Are you going to place a store in an area where people have higher discretionary income? Or areas where you’ll have lower income?”
Many grocery stores in poorer parts of town closed after the recession devastated the economy in 2008. Working-class families in the east and central parts of the valley were left without grocery chains for years.
Smaller, ethnic grocers stepped in to fill the void and revitalized the supermarket scene in those parts of town.
“We have to give a big hand to the ethnic stores,” said John Restrepo, an analyst with RCG Economics. “They came in and replaced traditional stores. They filled the gap chain stores left.”
Specialty ethnic stores don’t focus on household income like chain stores do. They concentrate on serving a specific population instead.
Today, La Bonitas, Marianna’s and Cardena’s are flourishing with multiple locations in the valley.
FIGHTING FOR AN AUDIENCE
To best understand the supermarket business, imagine a pie. The circle represents the valley’s grocery market; the slices, different sets of customers. One slice might include people looking for low prices. Another, customers who crave specialty and organic foods.
The goal for store owners? “Win as many people as you can in that segment,” Beahm said.
The most successful stores make it clear what they offer customers – cheap prices, bulk sales or gourmet offerings, for example. A customer likely wouldn’t go to Wal-Mart for fancy cheeses or Whole Foods for bargain prices.
Setting grocery stores apart from one another, however, has become more difficult since the recession.
As customers’ discretionary spending plummeted, big box retailers such as Wal-Mart flourished. Grocery chains closed weaker performing stores. Fresh & Easy shuttered eight stores, and Albertsons closed a pair of stores earlier this year.
The pool of competitors shrunk.
Analysts say the wave of closures has subsided, but the market continues to contract. Vons and Albertsons, for example, are merging.
So what’s a store’s key to survival? Offering customers something unique.
“Have a difference,” Beahm said. “Pick one, and own it.”
Beahm points to the national collapse of Fresh & Easy to illustrate his point. Owned by the English company Tesco, Fresh & Easy once commanded 27 locations in Clark County. After the recession, that number dropped to 19.
Industry observers say more than just the bad economy was to blame.
“How were they different?” Beahm asked.
“They had a great concept,” Restrepo said. “But they didn’t provide anything unique.”
Most everyone in the valley comes from somewhere else, and like in any transient city, new residents bring preferences from home.
That’s one reason Southern Nevada’s grocery scene is so diverse.
“There’s a market for everyone,” said Matt Bear, vice president of Las Vegas real estate firm CBRE, who has been analyzing grocery stores in the market more than two decades.
Looking for a more traditional market that won’t drain the bank? There’s Albertsons and Smith’s, which have more than 60 stores between them. Discount prices? There’s Wal-Mart, Costco and WinCo. Organic goods? You might turn to Trader Joe’s, Whole Foods or Sprouts. And for ethnic goods, La Bonita, Mariana’s, El Super and Cardena’s.
With such a packed market comes a fierce fight to stay relevant, capture customers and drive profits.
“The old model was ‘We’re going to open a store, and if you’re going to buy something, you’re going to buy it here,’” Bear said.
Such a confident approach doesn’t work anymore. Stores’ new approach has to be calculated and crafted for specific customers in certain locations.
“Stores are struggling to find who their customers are,” Bear said. “That has been the problem: defining an audience. Your customers want something, and you have to figure out a way to get it to them.”
WHY CUSTOMERS SHOP WHERE THEY DO
What drives customers to shop at a specific store? A combination of factors, experts say.
Some shoppers are loyalists and stick to one supermarket only. Others mix and match, visiting numerous stores to fill their grocery needs.
A couple of factors typically dictate their choices:
• Price: For some, low price is paramount.
But industry experts say stores can’t base their entire philosophy on pricing.
“If you only use price to draw your customers, there will always be someone who will offer lower prices,” Beahm said. “Pricing is one way, but not the only way.”
• Convenience: Most customers don’t like to travel very far to shop.
And when they get to the grocery store, they don’t want a big hassle.
“Convenience is a draw for people who want to shop,” Beahm said.
That can include proximity, short lines and ease of access to specific items.
• Product selection and quality: Shoppers might seek out a specific store because of the unique selection it offers or the high quality of its products.
Some swear by the quality of produce at one store, the selection of prepared foods at another.
• Vibe: A store’s feel and layout can go a long way in drawing customers.
Many feature mini specialty shops — olive bars, bakeries, sushi counters — staffed by employees who can answer questions. Specialty stores can be smaller and more intimate. Many offer special tastings or cooking classes.