Traditional Grocery Stores: Some are Winning Some Not Yet

There is no doubt that the Price-Value-Service Equilibrium that exist today within the traditional grocery sector is evolving faster than many traditional grocery stores are willing to admit according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

Given the increase in calls and followers specifically from Wall Street analyst, investors, and media; Johnson believes that the undercurrents of change are taking root from food retailers that stock pantry’s to food retailers restocking better for you ‘fresh foods’ with customer relevance. Which reflects the fact that consumers are dynamic not static. In food retail the vast majority of consumers do not take steps backwards they only move forward according to Johnson. We ask is the pantry of yesterday the future of food retail?

Foodservice Solutions® team consist of a mix of food industry research legends, sector experts, ethnographic leaders, marketing professionals, and one Grocerant Guru® all of which agree that the clarity and direction of traditional grocery stores is clear. 

So what does that mean?  Simply put there will be those doing what they have always done, and those that don’t.  So when the Wall Street types call what do they think?  Who knows?  But the one thing we all agree upon is that they ask some very good questions.

For example are traditional grocery stores simply to large?  Is Aldi the fastest growing grocer?  Will Lidl garner market share, if so from whom? What they are not asking is do consumers still stock a pantry?  What type of foods can be found inside a Gen Z household pantry, and Gen X household pantry, and a Baby Boomer household pantry? The team at Foodservice Solutions® uncovers the answers to those and many other relevant questions while conducting and reviewing our Grocerant ScoreCards. This leads us and our clients to a greater understanding of who is winning and who is losing the battle for an increase in Share of Stomach within retail foodservice. 

Recently one of our team was asked to comment on Kroger’s plan to ‘redefine the way America eats’ and the Whole Foods acquisition ramifications. So we asked one of our industry legends speaking about Kroger’s redefining stated that he could have written that during 1980 or 1990 for Kroger or any other grocery retailer back in the day.  Our own Grocerant Guru® said that it is familiar, comfortable, and a reliable statement for a food retailer that wants to maintain the status quo.

On the other hand when asked about the Whole Foods acquisition our legend had no comments only questions, all of which were proactively positive and each highlighting incremental opportunity.  While our Grocerant Guru® was a bit straight forward saying it is a ‘customer relevant move filled will consumer interactive and participatory challenges but a glimpse in to tomorrow’s food retail not yesterdays.”

The battle for Share of Stomach is not about retail sectors or how many retail avenues of fresh food distribution you sell food in.  It is all about the consumer and when, where, why they eat what they eat and how they eat it.

The team at Foodservice Solutions® does not know which company will be the next A&P.  They do all however agree that unlike A&P that began its decline 50 years ago and continued to capitulate market shave over the next 50 years the next retailer to fail will fail and fail faster.  Will that retailer be you?  Are you doing what you did 6 months ago, two years ago, or five years ago?  Does your growth come only via acquisition or are you driving incremental same store sales?

Does your path forward look more like yesterday than tomorrow? Interested in learning how Foodservice Solutions 5P’s of Food Marketing 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:  www.FoodserviceSolutions.us for more information.

Meal Mash-Up Grocery Stores vs Restaurants and More

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