Could it be that the supermarket industry's rush of recent years to inaugurate enhanced fresh-meals programs, in a bid to stem the flow of dollars to non-supermarket competitors, has been little more than "HMR hype?"
That's probably an exaggeration, but it's an opinion well worth considering. David Rogers broached it last week. He's a consultant based in Deerfield, Ill., who was a speaker at the International Dairy-Deli-Bakery Association convention in New Orleans.
His thought is that the supermarket industry was stampeded into the Home-Meal Replacement strategy by worrisome figures issued in 1996 by the United States Department of Agriculture, which claimed that the away-from-home food market had grown to a 46% share. Indeed, he might have added, percentages well in excess of 50% have been mentioned in many a forum.
He postulated that while such a share exists, it shouldn't be applied to making a decision about whether a supermarket operation should move into the fresh-meal business or not. Here's why: The USDA number includes institutional feeding and restaurant meals bought for business and business-entertainment purposes. And, in no instance, could supermarkets mount a meal program sufficient to capture dollars spent in such a way.
In reality, he claims, the proportion of away-from-home food dollars spent in non-supermarket venues is about 39%, excluding institutional and business spending. That's the number used by the U.S. Department of Labor's Consumer Expenditure Survey, which number has consistently fallen from a 1988 high of 43%. And so it was that many a supermarket operator -- studying a faulty chart -- embarked on a doomed voyage into the uncharted waters of fresh meals. You'll find a detailed news article about this on Page 23.
This is a provocative and interesting opinion, but could it possibly be true?
There's probably no doubt that a number of supermarket operators ill suited to run a complex takeout meal program were propelled into it by the fear that they were under heavy siege. This is borne out by the fact that the percentage of companies offering some sort of prepared-food program rose sharply between 1995 and 1997, but fell a year later. Moreover, total-industry performance remains strong, notwithstanding the pullback from HMR. A look at industry performance for 1998, as compared to the previous year, shows that total median sales rose, margins improved and same-store sales rose. (This is all based on numbers issued at last month's Food Marketing Institute convention.)
But HMR hasn't been all vapor. There can be no doubt that consumers are moving away from seeing meals as deriving from ingredients to be prepared, and increasingly are seeking prepared-meal options.
The bottom line is that retailers who can well execute a meals program should do so, but the great number that can't make the cultural leap needed to succeed would be better off leaving the meal strategy alone.
