Finding the Real Thing: Coca-Cola Reinvents the AisleDecember 21st, 2012 | Posted by in Uncategorized
Coca-Cola is revolutionizing the center-store beverage aisle with its new Beverage Aisle Reinvention (BAR) program, shifting the traditional food retailer paradigm of focusing on perimeter optimization. Since food retailers are concerned with sales per square foot within their stores, a well-implemented center-store aisle refresh could be advantageous for Coca-Cola’s retail partners in improving that key metric. Innovative features of the BAR program include vertical signage blades that extend tastefully into the aisle, inviting header signs, and electroluminescent lighting in both the end caps as well as in the arm-height shelf area deemed the “strike zone”. Perhaps the most significant feature is that all brands are organized in vertical sections with distinct color blocks, with all packages for a given brand appearing in one top-to-bottom arrangement.
Coca-Cola is currently testing the BAR in their Shopper Experience Innovation Center. Though this kind of beta-testing is important, in order to truly understand the profitability of the BAR program, Coca-Cola and its retail partners would benefit from conducting in-market tests in a small subset of representative stores before rolling the BAR out across their store network. Specifically, executives at Coca-Cola and retailers need to understand the disruption impact, break-even point, and cannibalization and halo effects of this program.
When grocery stores implement a significant change, there is likely to be some disruption to sales while the construction takes place. Consumers accustomed to purchasing SKUs in certain areas of the store may have difficulty locating their target items during construction. Further, there may be an impact on return visits, as a store may be perceived by consumers to be “incomplete” or “under renovation.” Understanding the precise construction disruption is necessary to fully determine program economics, and will be a key element in understanding the sales impact of implementing the BAR system across stores.
The Beverage Aisle Reinvention program will carry with it the up-front cost of installation, in addition to the added energy costs for the lighting in both the end caps and the middle shelf areas. It is unclear whether or not incremental traffic will account for the total fixed and variable costs of the BAR system. Further, the effect on incremental transactions will vary by store and by market.
As with most category-based programs, non-promoted categories are likely to be affected. There may be some consumers who usually shop primarily around the perimeter of the store purchasing milk, bread, and other staples, that are now drawn to purchase Coca-Cola brand products because of the enticing display. There may be another subset of consumers, however, who now purchase sparkling beverages but forgo other purchases, like non-carbonated drinks. Understanding the direction and magnitude of these cannibalization/halo effects can be nearly impossible to assess on a store-by-store basis without scientifically testing the change in a few stores first.
The Beverage Aisle Reinvention is the latest advance to come out of Coca-Cola’s innovation lab, and it has the potential to dramatically shift consumer behavior around sparkling beverages and center-store shopping. By conducting scientific tests to understand the overall impact of this program and tailoring rollout accordingly by market/location, Coca-Cola and its retail partners can make confident decisions and maximize the ROI of this innovation.