Grocerant Niche is Now Center Stage in Consumer’s Minds

 

Consumers continue seeking meal solutions particularly those solutions that save time, save on planning a meal, save them from cooking, according to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® who stated, “Grocery store deli departments have become innovative in what meals and meal component they are offering and how they are packaged, priced, and delivered. That innovation has garnered them incremental customer visits, driven customer migration, and driven top line sales and bottom-line profits.”

In a new report from, FMI-The Food Industry Association shows just how much growth there is.  Deli prepared foods sales totaled $31.3 billion for the 52 weeks ended Aug. 27, up 9.3% year over year and 19.2% from the pre-pandemic 2019 period, according to NielsenIQ data cited in the FMI Power of Foodservice at Retail 2022 report, released Tuesday. On a unit sales basis, deli prepared foods edged up 2.4% year over year and 7.2% from calendar year 2019. Pizza, in particular, turned in strong results, with dollar sales up 16.7% and unit volume up 20% over the 52-week period.

Now, overall deli sales climbed 12.3% to $47.9 billion in dollars at 3.7% in units for the 52 weeks, up 20.9% in dollars and 8.3% in units from 2019. FMI noted that the robust deli and deli prepared performance came as most fresh departments saw unit sales decreases during that period.

Rick Stein, vice president of fresh foods at FMI, stated, “When you look at most of the fresh categories, they are up in dollars. But that is being primarily driven by inflation. Our members enjoy the benefits of the increased dollars, but the worry is the volume wasn’t there,” ... “When we look at foodservice, the volume and the dollars were up not only year over year but versus pre-COVID, which is more significant.”

There is no doubt that, grocery store foodservice has benefitted, in part, from the lingering food-at-home trend, according to Stein. While the momentum has swung back toward restaurants as consumers have felt safer returning to public activities, many also have retained their preference for eating at home due to habits generated during the pandemic, hybrid work environments and high menu pricing at restaurants, he explained.

Stein continued, “Convenience and value combined lend themselves to eating more at home. So although foodservice [at restaurants] has reopened and there is a good segment of our population that’s going out to eat, every time they get the check, they’re realizing how expensive that is,”... “So I think that drives them to think about maybe a few less occasions eating out and a few more at home.”

Now I want you to think of a fast-food restaurants current check average.  Now read this and let me know if you think consumers believe grocery deli food is fast-food? FMI’s research, also based on a survey of 2,009 U.S. adult grocery shoppers, found that 71.7% of households bought deli prepared foods at least once during the 52 weeks through Aug. 27, up 0.9 points year over year. During that span, the number of purchases averaged 9.5, a 5.1% uptick, while transaction size averaged $7.78, up 9.6%.

The extended food-at-home trend also exposed many shoppers to all of the foodservice options at the grocery store as these operations have reopened.

Stein went on to say, “The way customers learn about what’s available comes more from in-store shopping, as they walk around the store,” … “They really became aware of all the offerings as they were doing more shopping for home. So, I think it all sudden started to get on their radar that there were options for them at the foodservice delis.”

Of grocery shoppers polled, 21% said they prepare seven or more dinners at home per week, up from 16% in 2021 and including food made at home, semi- or fully prepared items and leftovers.

Now according to Stein, “What happened is consumers started seeing the economic value of cooking at home. But you’re still talking about 50% of the consumers, and 49% are telling you that they're using the foodservice at retail to complement or accessorize their total meal,”. “So maybe they're buying the salad, a side dish, the main protein or the rotisserie chicken and then going home and combining it with other things. But I still think that’s playing into their game plan.”

Johnson says that this is worrisome for restaurants, in 2022, purchase frequency has risen for those who buy deli prepared foods more often. FMI’s report said 11% of grocery customers purchase deli prepared foods every few days (versus 9% in 2021), and 6% do so just about every day (vs. 4% in 2021). Conversely, the percentage declined in 2022 for shoppers buying deli prepared foods every few days, every week, every few weeks and less than once per month.

What restaurant sectors could be most affected? Well, midday and late afternoon are the top times of the day for these purchases. And while most deli prepared foods are bought as part of a regular grocery trip, 18% of shoppers make special trips for these items, FMI reported.

Stein continued, “Retailers have done a really good job of highlighting all the options, hot and cold, grab-and-go foods, etc. When you’re a more frequent shopper, you see those options, and that could be your only reason for the trip,” “You could be at home and deciding to go to the local supermarket to pick up something for lunch or something quick for dinner. And that’s increasing your trips because you’re not going to buy four days’ worth of foods that you want to consume that night. You’re probably just going to buy for that day or for that particular meal. So that’s why you're probably seeing the trip frequency equaling more purchasing.”

So, versus a year ago, 57% of grocery shoppers reporting buying the same amount of deli prepared foods, and 25% are purchasing more. Those raising their deli foodservice purchases tend to be men, urban dwellers, Millennials, larger households (more than three people), heavier grocery spenders, bigger online grocery spenders and hybrid workers.

Note, that more often, grocery deli-prepared meals replace a home-cooked meal (42%) than a restaurant meal (17%), and a third of grocery shoppers reported that deli prepared is an impulse purchase most of the time.

Still, FMI noted, there are key opportunities for grocery foodservice. A quarter of shoppers usually opt for deli prepared options, even though restaurants are the most popular solution (39%) for shoppers who don’t feel like making dinner themselves. Fifty-three percent of consumers said deli prepared foods are a good value versus taking out from or eating at a restaurant. And 43% of shoppers said a big reason they buy from a restaurant versus grocery deli prepared is they don’t think about it and the latter should be better advertised.

Half of the FMI survey respondents indicated the ability to order ahead — from a mobile app or online — and have an inside pickup station for pre-ordered food would drive more purchases deli prepared items. More creative approaches, too, would spur deli foodservice purchases, including vegetables/healthy options (cited by 58% of grocery shoppers), heat-and-eat sides (57%), meal deals/bundles (56%), total meal solutions (55%) and heat-and-eat holiday meals (27%). Over half of those polled also would be interested in “featured days” such as “Taco Tuesday” or “Pizza Friday.”

Restaurant operators need to think about this next quote from the report.  “We are trying to tell our members that you need to think, look and act like a restaurant when it comes to marketing your foodservice,” Stein said. “You need to have the technology that goes with it. You have to have apps so that customers can go to their phone, place an order and pick it up curbside. You need to think differently than just putting it in your print ad on page four. Perhaps you’re buying a billboard, perhaps you’re doing a TV or radio commercial that’s just talking about your foodservice at retail. So we think there’s still a lot of work to be done, but the leading lights are accomplishing it. It’s out there for the taking.”

Are you ready for some fresh ideations? Do your food marketing ideas look more like yesterday than tomorrow? Interested in learning how our Grocerant Guru® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit: us on our social media sites by clicking one of the following links: Facebook,  LinkedIn, or Twitter