Supermarkets are enjoying the fruits of success with prepared foods, but they don’t have the luxury of sitting back and enjoying it.
Price Chopper, Hy-Vee, Publix Super Markets and Super Foodtown are among retailers upgrading their offerings, in a trend that emphasizes healthy and fresh prepared foods, according to a recent SN feature article. Supermarket prepared food sales have grown more than 6% a year over the past five years, and this category is now viewed “as a profit center rather than a traffic driver,” said a recent research report from Technomic, which refers to this segment as “retailer meal solutions.”
But here’s the rub. The prepared food space is getting more competitive as a diverse field of retailers (including specialty and mass) enter the field, and restaurants gradually rebound. Consumers are likely to become confused by all the different marketing messages.
“All the players are using terms like fresh, healthy, value,” said Wade Hanson, principal, Technomic. “They are each using it in different ways. One retailer might refer to fresh as something prepared this morning, while another might use fresh for something that would be reheated from frozen.”
That makes it harder for traditional supermarkets to communicate their messages and stand out from other retailers and foodservice operators, but that’s what they need to do.
What are the best solutions? Here are some good suggestions from Hanson:
• Emphasize freshness and differentiate by using visible production, in which a chef or some other individual assembles parts of a meal in front of customers.
• Revisit product labeling, because a made-on date or made-fresh-daily promise can communicate freshness better than a sell-by date, which raises questions about when the product was made.
Read more: Price Chopper Looks to Foodservice Future
• Don’t abandon value offerings as consumers splurge a bit more. Value will still be important, even to consumers shopping in more upscale retail outlets.
• Keep a close eye on foodservice trends, including the strategies of the most innovative regional retailers, such as Wegmans, Central Market, Bristol Farms and Kowalski’s.
All this makes sense, even if it means operators need to revisit their strategies. The most important point is prepared food differentiation, and it echoes the challenges for supermarkets in other parts of the store.
We’ll find out if supermarkets are prepared for this new reality.
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