In the United States the undercurrents of change are forcing legacy grocery stores to evolve in way they never could have imagined 10, 15, or 20 years ago according to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.
Family size has hovered at 2.54 persons per household for close to ten years in the US where in 1985 it was at 2.74 and in 1970 it was 3.14 persons per household according to the US Census. Smaller households mean smaller food sales per household. What has changed even more is the rapid migration from the suburbs to cities of Millennial the largest demographic in the US.
Pantry vs Meals
Millennials seeking jobs have been rapidly moving to cities creating urbanized households that are lucrative to food retailers but since they are also delaying starting a family they have been abandoning legacy grocery stores in groves seeking fresh prepared foods as meal solutions rather than cooking dinner from scratch according to Johnson.
The conundrum for most legacy grocery chains is that their stores are in the suburbs catering to an ageing population that simply buy less food as they have even smaller households and smaller appetites. In food retail the increasing completion for consumer’s dollars has hit a tipping point today there are 29 restaurants for every grocery store according to the team at Foodservice Solutions®. Restaurants elevate convenience as a preference to coking and doing cleaning up.
Digital Skill-Set vs Cooking from Scratch Skill-Set
Complicating the conundrum even further Gen Z and Millennials continue to drive digital consumption as they have grown up with technology and most would rather play a game, text friends, or take photos of food on their iPhone than spend three hours cooking a meal from scratch according to Johnson.
The simple fact is today and tomorrows consumers continue to cultivate a digital skill-set and show very little interest in developing a cook from scratch skill set. In fact research from Foodservice Solutions® has indicated that when Millennials were showed 20 different cuts of beef form a grocery store 85.4% had heard of only 6 different cuts. However when asked if they could identify 20 different digital food app’s 83.2% identified 17 of 20.
The Grocery store conundrum has become one of yesterday vs tomorrow. One of urban vs suburban where legacy branded grocery stores can’t afford the rents in cities for the large stores they like to build and if they are in cites consumers prepared grocerant niche fresh prepared food over pantry stocking legacy foods. Simply put meal assembly have become cooking replacing cooking from scratch.
Legacy grocery stores must adopt a new food service platform to drive growth. Most grocery stores will have to create two different brands one for the suburbs and one for urban. Moving forward customer frequency will be more important that ‘basket size’.
Legacy CPG brands will increasing be replaced with or by fresh food retailers that are focused on Ready-2-Eat or Heat-N-Eat and prepared fresh food. If success leaves clues and it does retailers that evolve faster will garner the next generation of customers first. Does your company look more like yesterday than tomorrow?
Invite Foodservice Solutions® to complete a Grocerant Program Assessment, Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®. Since 1991 www.FoodserviceSolutions.us of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869