ATLANTA -- Food-service operators will likely bite deeper into supermarkets' prepared food sales in the future because they know food better and are more innovative.
That's how Marcia L. Shurer, a food-service consultant and president of Culinary Connections, Boulder, Colo., described the challenge that supermarket chains face in the increasingly fierce competition for the food dollar during her presentation at the Supermarket Foodservice Conference here, jointly held by the Food Marketing Institute, Washington, and the National-American Wholesale Grocers' Association, Falls Church, Va. She chided the industry for not doing enough to progress significantly beyond a total of about $8 billion of deli sales, "a drop in the bucket" compared with a total food-service business estimated at close to $300 billion.
She said that while the supermarket industry as a whole is still trying to fully grasp the concept of effective prepared food selling, many operators from the food-service community are progressing with important trends, from rolling out food retail outlets, to following consumers to non-traditional points of distribution, to manipulating their brand equity in lucrative ways.
When it comes to meeting or exceeding customer demands for prepared food, "A lot of you say it, but I am not sure you are doing it," Shurer told the retail deli and food-service directors in attendance. "Only a few retailers are cutting-edge, vs. 'me-too' operators."
She also said that despite the industry's stated strategic concentration on fresh foods and food service, "I still don't see very much fresh food in supermarkets. If a [fresh prepared] product spends one or two days on the shelf, you probably don't need it in the store at all."
Shurer labeled U.S. retailers slow to change and lacking in vision, compared with European operators with more successful longer-term fresh food strategies. She pointed to U.K.-based Tesco as a model, a chain that deliberately, over a period of years, brought to fruition its vision of competing more effectively against the crackerjack prepared food retailer Marks & Spencer.
Good food-service operators, she said, are aggressively seeking greater market penetration, by opening their own retail stores, by manufacturing and branding their menu items, and by opening scaled-down or hybrid versions of their restaurant operations.
Meanwhile, other operators have built on their brand equity by installing scaled-down facilities in major transportation centers around the country. Some are co-branding, such as Arby's, which acquired a Mexican format called ZuZu, and Starbucks, which is teaming up with Bruegger bagels.
Value pricing will continue to drive food-service strategy, she said, taking the forms of meal bundling, product "supersizing" and a constant parade of limited-time offerings.
Shurer advised supermarkets to be watchful of food-service trends at other classes of retail trade.
The prepared food business at convenience stores, for example, is expected to grow, especially as larger C-store operators continue "taking in fast feeders," she said. "Also, some of them are going into their own fresh food formats, with categories such as sandwiches, salads and entrees prepared at commissaries and shipped every day." C-stores present a particular threat because a big percentage of supermarket shoppers also go to such stores on a fairly regular basis.