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By Kathy Hayden
The business of food has moved far beyond providing meals. From food trucks to chef-branded food halls and on-demand delivery, food takes up more of consumers’ time, money and imagination.
At the same time, people are cooking less and less. Somewhere in this new food frontier, traditional grocery stores need to stake their claim, and many experts see grocerants or prepared food sections as the gateway to supermarkets’ future.
A report titled “The Sophistication of Supermarket Fresh Prepared Foods,” from Food Marketing Institute (FMI), shows that the category grew by an annual rate of 10.4 percent between 2006 and 2014, making it one of the highest-performing segments in the entire food industry. The same research showed that only 8 percent of responding supermarkets reported total store sales growth of more than 5 percent in 2014; 69 percent reported that same level of growth (or much higher) in their prepared food departments. Not coincidentally, 88 percent of banners now employ a corporate executive chef.
Beyond food upgrades, more attention is being paid to physical spaces and experiences: 23 percent of responding supermarkets reported having remodeled deli departments in the past three years, adding new features such as café seating, Wi-Fi and adult beverage sampling. Increasingly, these profit centers are being managed independently of deli sections: 43 percent of responding supermarkets indicated that they manage separate financial reports for prepared foods.
“Competition for food dollars is fierce,” notes Lauren DeMaria, chef and director of culinary and business development at CSSI, a Chicago-based marketing and culinary consultancy. “Even if people have their dream kitchens, they have no time to cook, but they want to eat the best food, both at home and when eating out. This makes prepared meals and almost-prepared meals appealing.”
Levels of Preparedness
Not all grocerants are created equally, nor should they be. In a recent research report, “Prepared Foods: The State of Fresh,” Nielsen researchers analyzed how a three-tiered approach to planning a prepared food program could bring success to retailers of any size.
Gillian Mosher, integrated marketing communications manager at Schaumburg, Ill.-based Nielsen, notes that retailers must continue to close the gap between restaurants and in-store offerings. The gap isn’t one that can be filled by food alone. She sees the quality or amount of options as part of the equation, as well as the experiences around the purchases, or making it easy for consumers to get the same on-trend flavors and fresh tastes in-store as they would in a restaurant.
“The [deli] experience all begins with understanding your consumer and choosing the right deli strategy by weighing the needs and circumstances of a store’s primary consumers, with specific capabilities,” Mosher says. “It’s OK not having all the bells and whistles, but knowing how to still stay relevant with your consumer is imperative.”
Outsourcing Some Options
Stores without the capability or demand for a robust deli prepared food program should take a level-one approach to managing what they have. Mosher sees these stores as better positioned to focus on basic staples, like deli service cheese or deli bulk meat. At this level, it also makes sense for stores to partner with other businesses to enhance their fresh prepared food offerings.
“In traditional grocery stores, there’s still a share of stomach that isn’t being served in the deli or frozen food aisles — we’re right in the middle of those two,” explains Rob Povolny, founder and president of Tampa, Fla.-based East Fresco Inc., a company that offers no-cooking, no-cleanup, heat-and-eat meal solutions for retailers and customers in need of quick options. “Our meals check in at 440 calories or under. The difference is the freshness and the great taste. They are portion-controlled, flavorful, restaurant-quality meals. These are fresh foods with a 12-day shelf-life. Customers can buy several for a busy week.”