REGIONAL STRATEGY FOR HMR IS BEING PUSHED

ROSEANNE HARPER

ATLANTA -- Supermarkets would be better off looking at regional suppliers, rather than national companies, as potential allies for attacking the home-meal replacement market, a consultant told attendees at a conference here.

The consultant, Stephan Kouzomis, president of Entrepreneurial Consulting, Louisville, Ky., said retailers ought to seek out suppliers of fresh prepared foods based in their specific marketing areas because the big national players have hitched their wagons to frozen, not fresh, products.

Kouzomis said consumers want fresh food that's restaurant-quality, not product that's been frozen, and the large national manufacturers are not providing it.

"Retailers are going to have to find the suppliers that can be flexible enough to give them what their customers want. It could be caterers or manufacturers or distributors who have been supplying the food-service industry.

"The large national manufacturers have made it clear that they don't intend to get into that type of production any time soon," Kouzomis said.

In an interview following the Atlanta conference, which was sponsored by The Marketing Institute, a division of the New York-based Institute for International Research, Kouzomis told SN that localized partnership is the wave of the future for HMR in supermarkets.

Partnering will likely be the dominant approach, especially for retailers who don't already have a central commissary because it is not cost-effective for them to make food in-house either by building a central plant or by making food in the stores, he said.

Kouzomis pointed to the partnership that Genuardi's Family Markets, Norristown, Pa., forged with supplier Celentano, Verona, N.J., as an example. (SN reported on that HMR partnership in the Oct. 21, 1996 issue.)

Celentano, a manufacturer best known for its frozen entrees, retooled to expand its capability for making a variety of fresh, nonfrozen entrees and side dishes. Celentano now delivers prepacked, ready-to-heat, single-serving products on a continual replenishment basis to Genuardi's 26 units.

Such alliances are just the beginning of a long road on which the supermarket industry needs to travel, Kouzomis said.

"We'll see more of this type of partnering, but at this point there is a wide distance between retailers and manufacturers and an even wider distance between retailers and consumers."

He said the next step after obtaining a restaurant-quality product is communicating that fact to customers.

"They'll have to make shoppers aware they can solve their meal problems. They'll need to get them into the store and show them. It takes a lot more than walking by the case. They could use e-mail, or direct mailing to frequent shoppers, radio spots, or they could take a small ad adjacent to their price ad in the newspaper," he said.

Kouzomis added that this year he has seen more retailers making commitments at the top levels to get into HMR.

"Senior management is realizing they need to be in it, and they're hiring management people from the food-service industry. I know of some who have hired brand managers from the manufacturing community to help them get the meals solutions message across to their customers," he said.

"More supermarkets this year are talking about hiring chefs, but the brand managers, even though they've been selling maybe Pepsi or cereals, have tremendous marketing experience. And it could be worth the investment because if a chain makes its prepared foods a destination, there's a halo effect. It will benefit the whole store. More are looking at it in that way," Kouzomis said.