- December 5th, 2016
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Thanksgiving Challenge: 3 Ways Grocers Can Compete Against Meal Kits
The rapid emergence of pre-prepped meal kits may culminate at the Thanksgiving table, as at least a dozen such services now offer complete holiday meals. The most reliable way for supermarkets to compete is by providing made-to-order experiences.
At few other times of the year do supermarkets play a greater role in the American household than in the days before Thanksgiving. This year, as stores stock freezers with turkeys and bakery shelves with pies, they should reflect on exactly what that role is becoming.
Many competitors, after all, are venturing for the grocery dollar. Among them, and gaining steam, are home-delivery meal kits.
The meal-kit market, started in 2012, will generate approximately $1.5 billion in U.S. sales in 2016, according to market research publisher Packaged Facts. This rapid emergence may culminate at the Thanksgiving table, as at least a dozen such services offer complete holiday meals.
True, $1.5 billion is a small percentage of the $800 billion supermarket industry. However, grocers are fighting for market share on many fronts that a few years ago were not considered a serious threat. Dollar stores, gas stations and pharmacies are expanding their food aisles to meet specific consumer needs. The food wallet, like the last pumpkin pie, is divided among more and more takers.
As supermarkets vie for the post-turkey dollar, they have just a few options. They can offer their own meal kits, which some grocery chains including Giant Eagle are exploring. Or they can develop reasons for the shopper to visit their stores that extend beyond picking up groceries.
Grocery Visits Down
Consumers are finding reasons to shop elsewhere.
The average number of weekly trips to a grocery store declined to 1.6 in 2016 from 2.2 in 2005, according to the Food Marketing Institute’s 2016 U.S. Grocery Shopping Trends report. Less than half of consumers (49%) see the supermarket as their primary outlet for groceries. In 2005, the figure was 67%.
Meal-kit sales, meanwhile, are expected to double to $3 billion in the next few years, according to the Packaged Facts report.
“Marketers are aiming for — and finding — a ‘sweet spot’ with consumers who do not have the time, inclination, or know-how to shop for individual ingredients, navigate a recipe, and cook from scratch, yet do not want to eat yet another heat-and-eat prepared meal, order takeout food, or dine out,” the report states.
Also, and importantly, meal-kit marketers position their service as a fun activity to do with others, bringing family or friends together. They’ve transformed the blasé act of meal preparation into a more joyful experience.
Belly Up To The Bar
Bringing joy to the supermarket aisle is a bigger challenge. Supermarkets are already tasked with making the shopping trip convenient, easy, affordable and friendly. In terms of function, it gets the job done. But it does not deliver a true feeling of community or family.
Many supermarkets have recognized this and are addressing it. The new Whole Foods 365 store concept, which invites local small-business operators to set up shop in the aisles, comes to mind.
Here are three others ways supermarkets are serving up community experiences that draw people into their stores and, importantly, keep them there longer.
Tables by the aisles: Some supermarkets, often higher-end chains, have offered dine-in services for years. Now more mainstream chains are exploring in-store dining to recapture wandering food dollars. In 2015, the amount Americans spent at restaurants overtook what they spent at grocery stores. In 2016, that figure rose to roughly $55 billion, according to the business news site Quartz. The Texas supermarket chain H-E-B operates restaurants at a number of its stores. Its Table 57 sells beer as well as barbecue by an award-winning Houston chef. Live music, happy hour and a kids’ play area are all part of the mix.
Bottling the experience: In some markets, consumers are making weekly dates at the neighborhood supermarket bar, where cocktails precede the cart. In California, the high-end Gelson’s chain plans to add six bars in 2017, according to The Wall Street Journal. Whole Foods, which operates beer halls and wine bars, invites shoppers at nearly 350 stores to carry their drinks while rolling the aisles. And Mariano’s, operated by Kroger, has wine bars with live piano music. Of course, the addition of a bar area in an existing store will require a transition of real estate. Supermarket operators could look at other service areas, such as florist shops, to see if the return on investment is better in a rocks glass.
Teaching a lesson: Cooking classes and demonstrations are a natural for the grocery experience, but downward dog lessons? Apparently so. In New Jersey, a ShopRite store operates a fitness studio that offers yoga, Zumba and other classes. On the weekends, a cosmetologist visits. These options not only lure shoppers into the store at times they might not otherwise visit, but also can create new revenue streams if the supermarket charges a small fee for each class. Alternately, a grocer can offer entry into such classes as a free perk for membership in a rewards program.
The services supermarkets offer can extend to almost anything that complements the area consumer’s lifestyle. Supermarkets can offer spa treatments, knife sharpening and even drawing classes (plenty of still life material in the produce section). The determining factors involve space, investment and the role the store wants to play in its market.
As Thanksgiving fades and the holidays approach, that role will become a larger factor of success.
This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.