Supermarkets giving small businesses bigger shelf life in stores

Could this grocery disrupter take on Amazon?

Grocery Outlet head of marketing Layla Kasha discusses how Grocery Outlet is disrupting the industry.

Grocery stores are shaking up the usual supermarket sweep.

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Food retailers across the country are reassessing how they stock store shelves by relying on their tech-driven research and data for product placement instead of having big brands like Kellogg's or Campbells dictate where snacks, cereals and household items should go and how much they should cost, the Wall Street Journal reported.

Retailers are leveraging their own research and data to stock products on shelves to increase profit margins. 

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That means major food brands like Cheerios owned by General Mills, and cleaning giant Clorox Co. would have less space on shelves making room for store brands and specialty products that can be in higher demand and bring in more profit.

The move comes as retailers allot more space to trendy new brands from smaller companies along with healthy food snacks. Of the nearly $17 billion annual packaged food sales, around 3.5 percent of the market comes from startup brands, according to Nielsen data as reported by the Journal.

Indeed, more shoppers are on the lookout for better-for-you foods from emerging brands. A 2015 study from market research firm Brandware found that 72 percent of consumers prefer to buy healthier snacks like hummus, veggie cups, fruit and grab-and-go yogurt. And some said they didn't believe that traditional grocery stores offered enough of them. What's more, 51 percent said healthfulness was most important to them when choosing a snack, according to Technomic's Snacking Occasion Consumer Trend Report.

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As a result, grocery retailers like Walmart and Kroger are using software to strategically figure out where on the shelf to these place items. And big brands have already felt the heat. Sales of baking products from General Mills like Betty Crocker, Bisquick and Gold Medal mixes and flours have declined in the last five years as shoppers opt for other store brands, WSJ reported.

Products that are top-sellers are slightly below eye level, and retailers typically put household staples they know shoppers are on the lookout for waist-high on shelves, according to Nielsen data reported by the Journal. Moving items from a corner spot to the top shelf, for example, can boost a product’s sales by 3.4 percent and stocking private-label brands next to name brand counterparts were also said to increase sales, according to the report. Kid’s-branded items, meanwhile, sell more when they are placed on the bottom shelf at grocery stores because that’s eye level for children, the data show.

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