Special Aisle for Ultra-Convenient Meals
Paying Off for Hormel Foods

By Dale Buss

When Hormel Foods wanted to create a center-store destination around “ultra-convenient” meals such as
its Hormel Chili and Dinty Moore stew products, the CPG giant launched a multi-year effort to understand
how consumers shop for those products and to adjust its merchandising and shopper marketing to hit their sweet spots.

Now, Austin, Minn.-based Hormel is beginning to see major payback from the moves it has been making to activate its shopper insights through “adjacencies” – tactics that have included leveraging color groupings, realigning product segments vertically on the shelves, forgoing a lot of showy but ineffective signage, and ultimately coming together in an ultra-convenience meals aisle.

“We’ve found that the best way to communicate with the shopper is to have your aisle and your category set up the right way to enhance the way the shopper thinks when they come to the ultra-convenient meal category,” Bob Samples, Hormel’s director of category planning and support services, told CPGmatters.

Long-term, Hormel’s goal is to create “an experience in the center store that is around quick and easy meals,” Samples explained, similar to how shoppers already regard frozen, dairy and meat departments as “major shopping points for them.”

The importance of this endeavor to Hormel is underscored by the fact that the company was recently
announced as the first manufacturer to achieve full certification in category management from the Category Management Association.

The company is best known, of course, for Spam, its canned-meat line, but Hormel also has a total of 33 other brands, each of which is either No. 1 or No. 2 in its category, including Jennie O turkey products, Black Label hams, and a number of Mexican-food brands. In all, about 77% of Hormel’s volume and 82% of its profits come from the center store.

Hormel launched its intense study of center-store shopper activation a few years ago with extensive research involving discussions with 1,500 shoppers regarding their attitudes about and approaches to purchasing convenience foods and meals. From that research, Hormel gleaned that 68% of consumers are aware of the kind of convenience brands it sells – but only 35% of them knew where to find what they wanted in those categories.

For example, Hormel Chili is a popular main ingredient in chili-cheese dip recipes, and the company previously merchandised the canned and microwaveable types of its chili together, believing that would make it easiest for shoppers to find them.

“But it turned out they wanted all of the convenience items grouped together, meaning that if they were looking for our microwaveable variety of chili, they were looking for a section of microwaveable foods – not, first, for our chili in different varieties,” Samples recalled.

Next, over the last year or so, Hormel refined its research in another project in which 500 shoppers were interviewed – and researchers also visited more than 50 consumers’ homes in “live-alongs.”

“We learned that consumers really didn’t understand how the category of ultra-convenient items worked,” Samples said. “They hadn’t put it together as a category.”

Hormel also found out that many consumers viewed its ultra-convenient products as the stuff of a “fourth meal” for each day, especially in two-income households. The economy actually was helping Hormel’s ultra-convenient products with these consumers, Samples said, because they often took the place of restaurant meals. Many also defined warming up a Dinty Moore beef stew, for instance, as “cooking.”

After all of those findings, he said, Hormel concluded that “we needed to get these products together in the right place in the store. We wanted to understand the destination better. What should we do to make someplace the right spot for all of this to come together?”

The formal objective: to “create an experiential center-store shopper destination for quick and easy meals that attract new consumers to the category and enable a deeper relationship with existing purchasers.”

Hormel tried various arrangements and adjacencies and, from how shoppers reacted in research, settled on a number of principles that helped the company come up with a proposed approach, which it then carried to retailers ranging from Bi-Lo to Kroger to Safeway.

First: Hormel concluded that “adjacencies trump signage.” Samples explained: “Signs didn’t matter; organization did. If you make it easier to shop the section, signs don’t make a big difference to shoppers in what’s going to happen at the end of the day.”

Second: Vertical is powerful. “Vertical was much more appealing than horizontal arrangements to shoppers and played a key role in how they viewed the category. Having the products in the right place was more important than having all the right products, because the category became more shoppable for them.”

Third: Brand and color blocking, as well as grouping products by occasion, all could play valuable roles in helping organize the ultra-convenience meal category in the store – and in the shopper’s mind. Hormel tackled this task keeping in mind, of course, how other brands such as ConAgra’s Chef-Boy-Ar-Dee pastas and Kraft’s EasyMac macaroni and cheese items also were important in the category.

“We needed to think in smaller blocks,” Samples explained. “So we could arrange products horizontally by occasion, but then box vertically within that [occasion] by brand to help the shopper find the right solution for them within the given occasion.”

Fourth: Hormel recognized that its proposed solutions wouldn’t work equally well, or equally as fast, in every store. It worked with “every major retailer in the last two years” figuring out in part, Samples said, which particular stores would best lend themselves to Hormel’s new in-store marketing scheme.

“We looked at 3,000 stores that would be the best, such as ones were we found the highest purchases of microwaveable items,” Samples said. “We focused on the ones that, done right, would result in the biggest win for the retailer and for us.”

Now that the new execution is in place in many of those stores, Samples said, Hormel has seen a 17% overall increase in sales attributable to the new scheme. “These results are significant,” he said.

And not just for Hormel – also for its retailer customers. “Many retailers are on board,” he said. “Every major retailer out there is making the shift to being more shopper-centric and using information like this to get the right store-level executions.”


Market Watch
Key Grocery Industry Group Creates Center Store Taskforce

By Lynne Cooke

Leading manufacturers have joined with the Food Marketing Institute (FMI), its members and other industry suppliers to launch the Grocery Center Store Initiative, a collaborative effort to promote the benefits of the center store of supermarkets and its growth opportunities.

Nestle Purina PetCare Company, Kimberly-Clark, Anheuser-Busch, Campbell Soup Company and The Kellogg Company have developed an action plan to demonstrate the significance of the center store to the total store performance. The Nielsen Company, Willard Bishop and Accenture, as well as Grocery Headquarters Magazine, are also partners in the project.

“Our goal is to address the important role of the center store in today’s and tomorrow’s supermarket. Our belief is that a sustainable, more vibrant center store is a key ingredient to achieving the promise of future sales and profit growth as part of the total store solution,” said Leslie Sarasin, president and chief executive officer at FMI. “Creating a new center store, one that responds to the needs of shoppers, anchored by key categories, and one that embraces technology, will benefit the entire supermarket industry and offer each retailer the opportunity to create a unique shopper experience within the store.”

The taskforce will demonstrate to retailers and wholesalers how the sales and profit contribution of the center store can increase trips to the grocery store. It will help identify the perimeter departments and the center store categories that drive up the number of shopping trips.

The group also plans to identify center store attributes that are seen as differentiating and equity building for retailers. The taskforce will study shopper attitudes toward the role of the center store and test new merchandising treatments, layouts and approaches.

For more information about the Grocery Center Store Initiative, contact Pat Walsh, FMI Senior Vice President, Industry Relations, Education and Research at 202-220-0703.

Metrics for In-Store Research
VideoMining Corporation, the leading provider of in-store intelligence for shopper marketing, has created a set of standard metrics to better quantify shopper behavior in retail environments. The measures enable retailers and consumer product manufacturers to accurately measure the impact of in-store marketing and other efforts aimed at influencing shopper behavior and increasing performance.

The measures are grouped into four broad areas that represent key aspects of in-store shopper behavior and interaction: Exposure, Engagement, Conversion and Segmentation. The most valuable applications of the metrics are measuring category or brand performance, identifying opportunities, and pinpointing “impact points” along the path to purchase where actions can be taken to influence in-store behavior.

VideoMining’s platform and the creation of standard metrics enable manufacturers to more effectively allocate dollars and achieve the best ROI on their efforts. The platform can be utilized to establish a baseline and form hypotheses, then trial new initiatives with an ongoing test and measure approach.


Special Aisle for Ultra-Convenient Meals Paying Off for Hormel Foods

Key Grocery Industry Group Creates Center Store Taskforce

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November 2010
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