Starting in July 2017, the foodservice price war begins as consumers are not eating less they are eating somewhere else. Chain Restaurants, Grocery Stores, Convenience Stores, Drug Stores, and Dollar Stores are battling for a larger share of stomach and those winning are offering meals and meal components for less. Beginning this July PRICE will play a leading role in driving retail foodservice customer migration in all retail foodservice channels according to Foodservice Solutions® Grocerant Guru® Steven Johnson.
The undercurrents of customer migration will be a larger problem than talks of union’s at Wal-Mart or Health Insurance at chain restaurants according to Johnson. Why a PRICE war and Why now? Simple LIDL.
According to Black Box Intelligence’s Market Share report “Since 2008, chain restaurants have experienced -14.8 percent same-store traffic growth. Furthermore, throughout 2016, total food and drinking places saw over 2 percent higher sales than chain restaurants” The simple fact is consumers are finding meals for less in other channels and migrating to retailers for lower cost meals and meal components according to our own Grocerant Guru®.
A recent study from AlixPartners revealed that consumers are planning to cut back on fast food and fast casual visits throughout 2017. “Diners who visit quick service or fast casual restaurants at least twice a week intend to cut back on their visits between 8 and 13 percent. Furthermore, 56 percent of surveyed consumers are planning to cut back on dining out in favor of prepared meals from convenience and grocery stores.”
Grocerant niche Ready-2-Eat and Heat-N-Eat fresh prepared food from Meal Kit offerings from Hello Fresh, and Plated to IKEA’s family meals in store or Heat-N-Eat are garnering customer adoption. Everytable, Green Zebra Grocery, Amazon Go, Snap Kitchen or other new non-traditional points of fresh food are creating disruption, garnering incremental customers from legacy food retailers. Simply put consumers are not eating less they are eating somewhere else. Why a PRICE War Why Now?
Lidl plans differentiate itself in an outdated US grocery marketplace as it opens 100 stores in the US by next summer and says its products will be 50% cheaper than competitors. That’s differentiation. This is nothing new for Lidl they have already taken market share away from UK supermarkets, the company said it looks to do the same in the US by fueling the price war with products that cost 50% less than competitors.
Restaurant customers facing every increasing menu pricing have been seeking alternative avenues of fresh food distribution since 2008. There is no evidence that the trend will ebb anytime soon according to the team at Foodservice Solutions®. Restaurants must evolve faster or slip away.
Aldi currently is the fastest growing grocery store in the US with over 1,756+ stores is planning on having 2,000 stores open by 2018. As regular readers of this blog know Aldi is also focused on PRICE and is changing the retail foodservice landscape. Aldi continues to garner a larger share of the traditional grocery store business. Even grocery store consulting firm Willard Bishop found that traditional grocery’s share of market slipped to 44% in 2016, four points below five years earlier.
Lidl with a $4 Billion investment is going to do the same. All the blabber in the industry trades is meaningless about incremental change at legacy grocery stores as most are more reliant on slotting fees than customers for survival and stock their shelves with food they get paid to carry not customer driven choice. Thus consumers are migrating and PRICE will simply accelerate the migration.
The only question to ask is who will be the next Marsh, the next A&P, the next Burger Chef? Walmart is positioning for the Middle which compounds headaches for all other legacy grocery stores. Differentiation will drive success moving forward and Grocerant Niche Ready-2-Eat and Heat-N-Eat fresh food will be the engine of that success. Traditional grocery stores must evolve faster or slip away.
Will the Dollar store sector prove more viable than the grocery sector as the dollar store sector add Ready-2-Eat and Heat-N-Eat fresh food? Will Ikea, Costco, Amazon Go, Snap Kitchen, and Pret A Manger garner your customers?
Consumers are not eating less they are eating somewhere else. Are you offering meals that are magical? I hope so. Are you offering Meals that look more like yesterday than tomorrow? If you are then Price will be the key drive from July 2017 until December 2018.
Success does leave clues www.FoodserviceSolutions.us is the global leader in grocerant niche business development. We can help you identify, quantify and qualify additional food retail segment opportunities. Has your company had a Grocerant ScoreCard completed, Grocerant Program Assessment, or new Grocerant niche product Ideation? Want one? Call 253-759-7869 Email: Steve@FoodserviceSolutions.us
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