Grocerant, supermarket, convenience stores, and dollar stores have conducted extensive research into food sales. Restaurants lack the focus and will to spend on consumer research the like the others. That is one reason they are capitulating marketshare to all the others. All of the rest are now in or entering the ready to eat and ready to heat To-go food niche (Grocerants). Food purchases (drivers) are now driven not by brand marketers with new units or introduction to a new product once a or twice a year but by the consumer. During the past decade consumers have acquired skills, powered by the internet, to find food that is “better for you” or the flavor of choice. This smarter customer creates a faster changing retail food retail marketplace. In fact I have developed a new price value equation that retailers should follow:

Price + Quality + Service + Portability = Value
Incremental Value = Constantly Changing Menu (Seasonally / Sustainability with creditability)
If the food can be eaten with the hands; that my friends are a home run. Interactive, participatory and just what the consumer wants.

Grocerants could become the Next Big Thing. The Food Marketing Institute has identified three stages of the new shopper patterns:
1. Stage One, shoppers move to save money by changing their out-of-home patterns -- switching from fine dining to fast food, and then to supermarket meal solutions in place of restaurant meals.
2. Stage Two, consumers focus on changing their shopping behavior within the grocery store they have always used, scooping up more private brands and basic ingredients, and relying more on coupons and shopping lists.
3. Stage Three, shoppers begin to rethink where they shop. Full-service supermarkets were identified by 56% of shoppers as their primary store -- down from 60% last year -- with most considering themselves loyal to their primary store, but more reliant on new channels for secondary and fill-in trips.
Only the unemployed have more time. The rest of us have seem to be working harder and doing more and is some cases more for less. There still are only 24 hours in a day. Ready to eat, or ready to heat foods with new and bold flavors continue to attract more customers. Grocerants are going to be a booming format for consumers.

The price, value, service equilibrium continues resetting right now it seems that Supermarkets / Grocery stores are winning, they are becoming Grocerants. Restaurants and Convenience stores seem to be following by traffic is up at convenience with few new product roll out, it must mean price is a driver of traffic. With the up surge in sales of ready to eat and ready to heat food niche all players are in a mad race to find new sale drivers via new food products lineup. The consumer is always looking for new product, packaging and attractive price points, in turn restaurants, C-stores and grocery need incentives that will drive traffic. All have noticed a discontinuity in consumer food shopping behavior and all are fighting for share of stomach. Contributing to this displacement is a focus by restaurant chain leaders on short term market metrics and away from the consumer. Which in turn has caused a loss is consumer traffic. The consumer then turned to the grocery store hot food section (ready to eat). The problem is the grocery stores were not ready for it. The have dropped the ball, food quality is slipping and they do not understand customer service in the hot food ready to eat niche! The consumers will not stay long if things don’t improve rapidly. The battle for the consumer dollar continues.

Convenience stores and supermarkets have focused on ready to eat and ready to heat foods meeting consumer demand while building unit margins. “Might it be we (restaurateurs) have missed something? Could it be that the consumer is shifting? As Nielsen’s channel blurring study has stated year after year, channel blurring is not in the mind of the consumer; it is only in the mind of the BRAND MARKETERS! Restaurant brand marketers are more focused on controlling the brand than cultivating it. The industry equilibrium is resettling and it is all about share of stomach.
Harkin back to the original Eatzies a great example of a GROCERANT days when consumers flocked to that concept. They had a solid point of differentiation. It is my belief that copy cat niche chains have no marketing differentiation. Restaurants, C-stores and grocery operators are all faced with this new unstable paradigm. Grocery stores and C-stores on the East Coast have repositioned themselves with solid research, new highly educated staffs, and a laser focus on the consumer. Here is how I think they are winning: Packaging, Price, Portion, Portability and Purpose.
Our industry is reluctant to spend on research, quick to hire recycled industry vets, and even faster to copy what worked during the past 6 months, while looking no further. We have a half-full glass, we can adapt quicker, we have more quality touch points with the consumer, we can solve the consumers time starved problems faster, and most importantly, the consumer looks to our industry for leadership. I for one know we are up to the challenge.”

Supermarkets, convenience stores and restaurants all have image problems with their packaging. The trash that lay’s on the side of the road with brand logo’s and vibrant color is not the value add benefit marketers were looking for. While Convenient Meal Participation (CMP) is growing and more profitable than any other sector of the indsutry. I believe we should follow the lead of Frito-Lay and create new compostable packaging. If a chip maker can do it we must follow. Restaurants had been in the lead on social issues in the past. Now as our sales lag we are giving up ground in the consumer relevance area to the likes of a chip maker? To quote recent press article:

“Just in time for Earth Day, PepsiCo’s Frito-Lay Div. is rolling out compostable packaging bit by bit this year, with a fully compostable bag due out on Earth Day in 2010. Applied to bags of its SunChips brand, a popular line of multigrain snacks, the plant-based, biodegradable material is a structure made of NatureWorks’ ( www.   natureworksllc.com  ) polylactic acid (PLA) fi lm, said to decompose over 14 weeks when placed in a hot, active compost bin or pile—at home or at an industrial composting site.
The PLA film is made with NatureWorks Ingeo™ biopolymer resin made from plant sugar.
Frito says it’s the first in the convenience-food industry to introduce such packaging. Reports Thomas Oh, director of the SunChips brand, “Consumers very much want a healthier snack,
and we realized a couple of years ago
that those same consumers have an interest in what’s healthy for the planet,” he says.
“From an organizational standpoint, SunChips is the lead brand for communications around sustainability initiatives.” “

Times they are a changing and the ready to eat, ready to heat niche should focus on food and as importantly the packaging.

I recently asked "What sector of the restaurant, grocery or convenience stores sector will see the greatest volatility from the rapid rise of commodity prices? Up or down any ideas for Q4 2009?" Chris Mitchell responded with great insight” Discretionary spending commodities will be impacted mostly. High end restaurants, high margin grocery products and c-stores in general. Q4 will see the beginning of the end of the recession if . . . food harvests this summer are average or better.The great depression was as bad as it was for an important reason. The great dust bowl destroyed crops and turned an economic recession into the depression and contributing to the extended length of time it covered. With a good harvest and without more serious difficulties in the recovery plan, Q4 will be the best Quarter in 2009. 2010 will return to normal to slow growth. That is my prediction. “I have to admit that I was raised in the Midwest and heard about and watched the crop report with interest. It does play a major role in our continued economic slump. My personal concern is gas prices, they will squeeze the consumer and sales of all other things will slip.

Convenience stores are the bright spot when it comes to sales of the three sectors I follow. Both Grocery stores and Restaurants will lag in growth and restaurants will most likely see a decline in sales this year. If consumers are creating a new value price equilibrium; what does price mean?
P = Perceived Marketplace Position
R = RELEVENCE to the consumer
I = Impulse choice or no choice
C = Convenience for the consumer
E = Excellent value added quality