Let’s face it the Dollar store sector at the end of 2016 had over 30,793 retail outlets in the United States and most sell legacy CPG foodservice products for less than most traditional grocery stores do in the minds-eye of the consumer according to Foodservice Solutions® Grocerant Guru® Steven Johnson.
Now many dollar stores are testing grocerant niche prepared foods. What are grocery stores to do? Clearly they can’t continue too capitulate market share to the dollar store sector. Now, the ever-improving economy is driving demand for and a new path to purchase specifically grocerant niche Ready-2-Eat and Heat-N-Eat fresh prepared food. Ok, let’s look at some grocerant numbers:
According to Nielsen,” total deli sales reached $24 billion in mid-2016, with 58 percent of dollars generated by fresh prepared.” Now as a percentage of total fresh purchases, prepared foods average 17 percent and continue to grow.
Nielsen Fresh research found one thing that is of particular importance that is grocery carts that included “fresh prepared items average $64 vs. just $41 for the average basket ring.” Additionally “Fresh prepared is the fastest growing area in the fresh perimeter, driving both innovation and differentiation among retailers.” Which is key for without differentiation grocery stores will continue to fade as Dollar stores grow. So what else should we glean from the Nielsen report? Here we go:
1. In a typical week, shoppers report that roughly 4.5 of their dinners require some level of food preparation.
2. Deli-prepared chicken is the highest-penetrated category, and its best opportunity is to stave off the declines in spend and trips per household.
3. Other categories have a chance to grow penetration through increased awareness with sampling and co-promotion (particularly deli appetizers). Opportunities will differ on store audience and location.
4. While older generations tend to do more scratch cooking, younger generations’ habits point to a growing opportunity for fresh prepared (and value-added) options to help busy consumers get a jump start on meals at home. Millennials, in particular, increasingly mix and match scratch, semi- and fully-prepared items when preparing dinner.
5. Despite best intentions, shoppers admit dinner often requires last-minute adjusting. During the week, eating out is more frequently a last-minute decision, making time and speed important considerations for alternate options to cooking.
6. On the weekend, dining out is more of a planned vs. spontaneous activity, and variety and ambiance become more important.
7. Grab-and-go volume has increased significantly over the last 18 months, with peak times being 12 p.m.-5 p.m. on weekends. The flip side for supermarkets is that focus on speed undermines shopper desire to shop the rest of the store.
8. The “4 p.m. planning void” and dinner plan spontaneity provide great opportunity to drive supermarket fresh prepared as an alternate solution to avoid losing the dinner occasion to restaurants. However, in order to take advantage of this opportunity, grocery stores need to become more top-of-mind as an alternative to eating out at restaurants.
Grocerant niche Ready-2-Eat and Heat-N-Eat local fresh prepared foods are the best way for legacy grocery stores to compete with restaurants, convenience stores, drug stores, and dollar stores.
Foodservice Solutions® team is here to help you drive top line sales and bottom line profits. Are you looking a customer ahead? Visit www.FoodserviceSolutions.us for more information or contact: Steve@FoodserviceSolutions.us Remember success does leave clues and we just may the clue you need to propel your continued success.