Tuesday, August 10, 2021

Kroger Wants to Be More than CPG

Slotting fees once ruled the day for traditional grocery stores the ilk of Kroger.  The slotting fee allotment your company would get from any Consumer Package Goods (CPG), company, would drive how much shelf space their products would find on the shelf at any specific food retailer.  The more you could afford to pay a banner the ilk of Kroger, the more of your products would be on the shelf. 

Here is the problem with that system today.  According to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions® most consumer do not stock a ‘pantry’ the way consumer did back in the 1950’s, 1960’s, or even in 1970. In fact, according to recent Foodservice Solutions® grocerant ScoreCards, stocking the pantry is not in the top ten things most customer want to do while shopping.  Number one on consumer’s minds is What’s for Dinner? Consumers are looking more meals and meal components today not products sit on the shelf in a pantry at home according to Johnson.

The Kroger Co. over the past 10 years has talked a lot about meals, and meal components, even opened restaurants and experimental stores but they have not found a way to break their dependence on slotting fees according to Johnson.

This new off-premise restaurant concept will debut in a Los Angeles, CA at one of Kroger’s Ralphs stores later this year, with additional locations planned for the future, the companies said in a news release. The concept will provide in-store shoppers access to meals from as many as six local and national branded restaurants and serve as preparation and delivery hubs for online users of the Kitchen United website or app. The release did not specify the participating restaurant brands.

Dan De La Rosa, Kroger's group VP of fresh merchandising, stated, "Our customers' appetite for fresh, on-demand meals continues to accelerate, and we remain focused on offering new and innovative products that provide anything, anytime, anywhere.”… "Our partnership with Kitchen United taps into restaurants' growing use of off-premise kitchen space to increase customers' access to their favorite foods.”

Here is the problem. Our new 2021 Grocerant ScoreCards found 82.3% of consumers don’t know what’s for dinner at Noon, and 61.1 don’t know what’ s for dinner at 4PM %. Consumers are looking for meals, not CPG products to sit on a shelf in a pantry from a bygone era.

Today, 83.1% all dinners have at least 1 grocerant niche Ready-2-Eat and Heat-N-Eat meal component and 68.4% have two meal components. Ghost kitchens offer meals and meal components and Kroger a new way to participate in the booming foodservice field while providing an efficient way for area restaurant brands to expand their reach and leverage Kroger’s store traffic.

Such concepts could also take advantage of often-underutilized food preparation space in existing grocery stores. Our grocerant guru doubts the sincerity of Kroger’s efforts as anything more than outsourcing consumers focus on meals too a competitor.

While, Kitchen United is a leading provider of restaurant hub technology, logistics and turn-key commercial kitchen space that lets foodservice operators tap into the growing off-premise business opportunity to save cost and labor vs. traditional brick-and-mortar sites.

 Michael Montagano, CEO of Kitchen United, stated, "Kitchen United recognizes the significant value of Kroger as a strategic partner," … "Our work together provides participating restaurants access to millions of Kroger customers and the ability to better address off-premise demand in a convenient supermarket format—a frequent destination for most consumers."

Montagano continued, "We've worked collaboratively with the Kroger team to curate a mix of popular restaurant brands, and we see a great opportunity to introduce our partnership in cities across the country."

So, how does it work? Consumers when placing an order using the Kitchen United website or app or on-site via ordering kiosks, customers can select items from each on-site restaurant to create a customized order on a single receipt. Restaurant staff will prepare the orders and delivery service fees will be determined by third-party providers, the companies said.

Craig Gauden, Kroger's director of partnership development, stated, "As we continue to define Kroger as a food destination, this collaboration creates another seamless way for our customers to order lunch or dinner for pick up while they shop for groceries or for delivery to their location of choice".

Consumers are looking for meals and meal components not slotting fees.  What are you selling them and Why? Are you doing what you have always done?

Are you looking for a new partnership to drive sales? Are you ready for some fresh ideations? Do your food marketing tactics look more like yesterday that tomorrow?  Visit GrocerantGuru.com for more information or contact: Steve@FoodserviceSolutions.us Remember success does leave clues and we just may have the clue you need to propel your continued success. 

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