What is propelling center store
either forward or backward?
Jesse R. Garcia: Our expertise is in
cereal, which, in spite of a downward
trend in recent years, remains the third
largest dry grocery category at $8.7
billion in annual sales. For the past few
years, cereal has experienced competition from other categories. But also,
the cereal category has suffered from
reduced consumer investment and a
lack of true innovation. There has been
a lot of noise about innovation focused
on health at the expense of innovation
around great taste, which is the No. 1
consideration for what people choose
for breakfast. We are very optimistic
about the cereal category. As we look
to the future, the two largest growth
demographics are Millennials and
Hispanics, and both groups over-index
in cereal purchases. To capitalize on
this opportunity, we will need to focus
product innovation and merchandising
on meeting their needs.
How can retailers build their
center store image, as well as
their center store sales?
The good news is that we are seeing
the cereal decline moderating, and
sales are leveling off. Cereal is the No.
1 choice for breakfast and still has one
of the highest household penetrations
of any center store category at 93
percent. Now is not the time to walk
away from cereal by reducing shelf
space and promotions. Smart retailers
will seek to optimize their shelf sets
for their consumers and their neigh-
borhoods. Every segment within the
cereal category plays a role as retailers
“fix the mix,” making sure that they
are providing the right products at
competitive everyday and promotional
prices. To build center store image,
retailers must first know who their
most important shoppers are and then
make the changes necessary to meet
What can Post Consumer Brands
do to help out in terms of
merchandising and marketing?
We are the only major cereal company
that is 100 percent vested in cereal.
We cannot be successful unless we—
and our retailers—grow profitably.
That is why we are increasing our
investment in the category, including
advertising and consumer promotions
on our core best-selling brands. We
are making changes to our merchandising and packaging to improve
consumer appeal and shop-ability.
Because we offer the broadest portfolio of cereals spanning all segments of
the category, we take a holistic view
of the category. So, as retailers adapt
to the impact of changing consumer
demographics and regional preferences, we are well-suited to work
with them to achieve their unique,
right mix to drive growth.
How about in terms of new
We believe the key to successful
innovation that will actually grow the
category is to offer the right prod-
uct at the right price for the right
consumer. Because taste is king in
the cereal aisle, we will continue to
invest in taste improvements across
our portfolio where it makes sense
and will increase consumer appeal. We
will innovate to meet the preferences
and needs of demographic groups that
will drive growth in the category.
In five to 10 years, what will the
center store look like and is that
the right direction for retailers?
The only constant is change. That said,
backing away from the center store
categories that are the work horses
and base of the business does not
make sense. Center store categories will still be highly relevant for
consumers in five to 10 years but
retailers will have to find new ways to
fulfill the needs of their shoppers. As
the CPG industry changes with new
channels and new formats, it will be
imperative that traditional grocery
stores continue to adapt to changing
consumer behavior by making their
center store categories attractive and
accessible to consumers. Embracing
digital and mobile, including things
like click-and-collect or home
delivery will be critical to success.
Many center store categories are ripe
for a subscription model that meets
consumers’ need for convenience and
retailers need to build and keep shopper loyalty.
POST CONSUMER BRANDS
Jesse R. Garcia, senior vice president of sales and chief customer officer
for Post Consumer Brands, says the key to successful innovation is to offer
the right product at the right price for the right consumer.