SECAUCUS, N.J. -- Supermarket operators must begin acting like restaurateurs if they're going to succeed in the meals business.
That's the bottom line, according to Jim Riesenburger, a partner in Design Associates -- Riesenburger, Roberts & Leenhouts, Rochester, N.Y. He addressed attendees at the RLB Distributors' Food Show at the Meadowlands Expo Center here late last month.
"The supermarket shrink mentality has to go out the window," Riesenburger said. He compared restaurant thinking and supermarket thinking as addition vs. subtraction thinking, and urged supermarket operators to concentrate on selling prepared foods.
He recommended that they create home-meal replacement programs that are top-line driven, with a lot of lot of cross merchandising and upscaling.
"Our objective should be to sell four or five items at a time, by cross merchandising them, and to trade up on increased margins. That's where we need to be in the industry. The old days of selling shelf-stable products at low prices are no longer with us."
Riesenburger also said sampling and demoing, and creating HMR displays big enough to make a statement are absolute prerequisites for success. Locating them conveniently, too, is crucial, he said.
He also talked about the challenge of getting consumers to think of supermarkets as a place to get a top-quality meal.
"The way to win customers' confidence is to start with hot, ready-to-eat foods and then migrate into chilled, prepacked items." To keep labor costs in check, and for other reasons as well, Riesenburger recommended striking up partnerships with regional manufacturers to develop signature products and components. He suggested the components be assembled in-store, preferably in view of customers.
"That way the value and integrity of the product remains, and you have animation, the theater that you get by assembling the parts in your store," Riesenburger said.
He stressed that the market is ripe for high-quality prepared foods to take out, because fewer consumers are cooking. They have less time, but more disposable income. He said the opportunity for supermarkets to give customers what they want is great.
He pointed out that studies show they want fresh, good-tasting food in increasing variety, convenience, value, healthy alternatives, and they want eating to be fun. In addition, they want to spend more time at home. He noted that represents a fertile market for HMR.
There has been growth over the last year in takeout from supermarkets, but Riesenburger said the growth is minuscule compared to what it could be if effective HMR programs were in place.
"We [supermarkets] need to provide restaurant-quality fare at supermarket prices and we need to do it consistently," Riesenburger said.
"I firmly believe that we need to help customers get fresh-tasting meals on their tables by providing products that are top quality, convenient and value-priced," he added.
Not only that, but the customer also needs to able to find what he wants quickly, and he should be "wowed" as soon as he enters the store, Riesenburger said. "The customer should be presented in your store with a pleasurable experience that caters to all his senses."
It takes restaurant thinking to do that, Riesenburger said, explaining that the meals business should be sales-driven and it takes time to make a profit. "We need to budget for shrink and for payroll. There's no instant gratification. We need to allow the products to gain a foothold and succeed," he said.
"I've seen some successful operators allow for in excess of 20% shrink in the first month. Then, the second month, it could be 15%. Eventually, you get it down," he added.
"On the other hand, I've seen district managers who refuse to put out mass displays because they're afraid there will be too much waste," Riesenburger said. That's one way supermarket thinking is sabotaging HMR programs. But there are others, he noted.
"There's a huge gap between supermarket and restaurant mentalities that needs to be bridged if we are going to succeed. A primary example is supermarkets selling [prepared foods] by the pound. That's an example of the supermarket operator not taking into account what the consumers' needs and desires are. You don't go into a restaurant and buy your dinner by the pound," he added.
He pointed out that it is possible to do all the things he recommends and build a truly profitable HMR program within the supermarket. Not only that, but he said he believes it's essential to do so in order to see any growth in supermarket sales.
"Operators who deliver high-quality prepared food at reasonable prices will reap the rewards of growth. Others will be challenged to defend their existing business," Riesenburger said.
He cited Wegmans Food Markets, Rochester, N.Y.; Ukrop's Super Markets, Richmond, Va.; and Victory Super Markets, Leominster, Mass., as examples of supermarket chains that are experiencing ongoing success with their prepared-foods programs.
Riesenburger was director of deli operations for Wegmans for 10 years prior to joining with Terry Roberts and Mark Leenhouts to form Design Associates, a consulting and design firm.
"Some are doing it right. If we talk about the Wegmans, the Ukrop's and the Victories of the world, if we understand them, we can use them as a model," he said.