Recently, Kroger, the largest grocery chain in the United States, made a bold move to take control of its own shelves. The retailer hired a third party privately held distributor, Southern Wine & Spirits, to oversee the aisle allocation of beer, wine, and liquor brands across all of their stores. Aiming to be more responsive, Kroger plans to offer new craft brands gaining popular consumer interest, and make seasonal shifts to reflect consumer consumption patterns likes like light wines in the summer and deep reds in the winter.
One of the controversial components of this third party partnership came about in terms of monetary influence for slotting space. Southern Wine & Spirits has extended “voluntary contributions” from the manufacturers, which until now has always operated without an exchange of money.
While the decision has become a hot topic for debate, the big question is what does this mean for the future of grocery? What could the implications be for other categories? The next gen of category captains calls for a greater need for a mutually beneficial retail relationship. One of the essential pieces to the partnership is sharing data to manage the white space between retailer and consumer goods brands. In some cases, digitally based data like POS and loyalty insights are never shared with category captains. For consumer goods it could create an opportunity to understand what consumers are buying to identify new product and portfolio extensions that respond to consumer demands. In turn it benefits retailers to be able to deliver products that create interest for consumer traffic.
Takeaway: As category captains look to grow their presence and maintain their position in grocery they will need to ensure that they are aligned with evolving consumer preferences and adapting to the new change of pace at retail.