Monday, September 21, 2015

Grocery Stores Are Getting Schooled by Meal-Kit Companies

Where do you buy your groceries? Millennials are opting to buy online from meal-kit companies avoiding the grocery stores altogether. While legacy grocery stores continue the outdated practice of relying on category management for solutions.  Meal-kit companies rely on transparency, education, and simplicity in meal preparation, planning, and production to elevate food and garner customers.  
In short Meal-kit companies provided cooking ‘training wheels’ for Millennials according to Foodservice Solutions® Grocerant Guru®.  In an ear of heightened focus on sustainability, food waste, and discovery meal-kit companies are stepping up and standing out. Consumers today are informed, enlightened, and demanding transparency in choice.  Don’t category managers do just the opposite? 

Why is Aldi the fastest growing grocer in the United States?  Why does Trader Joe’s have retail sales per square foot that are three time higher than traditional grocery stores?  It’s time for more food merchants and with a customer focus and fewer category managers.

Meal kits  companies provide us a glimpse into the future of food retailing according to our own Grocerant Guru™ who stated “while most industry professionals agree meal-kit companies are not a long term solution to food waste, food sustainability, they have broken the retail grocery footprint malaise conundrum of how not fill up the space with slotting fee products. They have shifted the sales focus on the customer and away from the manufacture.”

That is what would be called an operational efficiency that even Harvard professor Michael Porter would describe as disruptive.  Traditional grocery stores are trapped in a footprint malaise created by category managers, tasked to maintain the status quo.  Category managers, sadly rationalize and justify categories by slotting fees shelfs to fill.  All the while food merchants are creating disruption, ignoring self-imposed industry rules created only to edify the status quo rather than consumers.

Here is a list of Meal-kit companies compiled by   
  • BLUE APRON. Launched in 2012, it raised $58 million and delivers more than two million meals a month.
  • PLATED. Launched in 2012, it raised $21.6 million and claims to be doing twice Blue Apron’s volume.
  • HELLOFRESH. Launched in 2011, it’s currently valued at $1.1 billion with plans to go public as early as October, 2015. They report 250,000 regular subscribers and claim to deliver 4 million meals monthly to customers in the US, Germany, Great Britain and the Benelux countries (the Netherlands, Luxembourg and Belgium.)
  • MARLEY SPOON for the creative and curious
  • PURPLE CARROT for the vegan
  • FRESHOLOGY for the heath-focused
  • PEACHDISH for southern-inspired cuisine
  • The HANDPICK app offers 3-meal bundles with themes like Ranch to Table, Garden Harvest, and Flavors of Asia and full-sized grocery products and prices starting at $5.50 per meal. They call it “smart grocery.” (For now, Handpick only delivers in CA.)  
Ready-2-Eat and Heat-N-Eat fresh prepared food is consumer driven, consumer focused, not limited to traditional locations, footprint size, or retail type. What are you selling and to whom?  specializes in outsourced business development. We can help you identify, quantify and qualify additional food retail segment opportunities or a brand leveraging integration strategy.  Foodservice Solutions of Tacoma WA is the global leader in the Grocerant niche since 1991 Contact:

1 comment:

  1. Steve,

    You're spot on in seeing meal kits as a powerful way to sell food with a greater focus on meeting the immediate needs of many consumers.

    It is surprising that more traditional food retailers haven't picked up and run with this opportunity since many are in a very good position to ride the trend.

    Unfortunately meal kits appear to be outside the comfort zone for many food retailers so it'll be interesting to see who, if anyone, picks up on it. My guess is, if anyone does, the first will be Wegman's with their strong focus on food.