Reality Check: Supermarkets Are Not Restaurants 2007-04-23 (1)

By David Orgel
Editor-in-Chief

Supermarkets definitely have restaurant envy. For decades supermarket food-service departments have tried to compete with restaurants by becoming more like them. Yet too often retailers forgot their delis were actually housed within supermarkets.

Those burdened with this syndrome need to read this week’s SN Roundtable on deli/meal trends (Page 14). Four panelists — representing retailers Hy-Vee, Big Y, Piggly Wiggly and Minyard’s — offered fresh points of view about the opportunities and limitations of supermarket food service.

These retailers aren’t opposed to borrowing ideas from restaurants that make sense for their stores, such as certain types of meal bundling or rotation of menus.

But they aren’t willing to adopt a practice just because restaurants do it. Take meal bundling. It’s a classic restaurant technique: offer a package consisting of an entree, two sides and a beverage, for example. Sounds perfect for supermarkets, right?

Not necessarily, according to our panelists. They were wary of overdoing bundling because consumers may resist buying a meal altogether if they don’t want a particular side or drink. Shoppers may prefer to pick up a bottled beverage or box of frozen vegetables elsewhere in the supermarket, so why discourage that purchase? These are issues restaurants never have to face.

It’s tempting for supermarkets to want to embrace restaurant strategies such as curbside pickup, offered by establishments such as Applebee’s. But does that really make sense for supermarkets? Our panelists said no. Their reasoning was solid: why put so much energy into capturing one particular type of consumer when you can instead focus on the mass of shoppers already walking the aisles and passing by your delis? What you most want to avoid is having those shoppers leave the store and head to a restaurant to pick up dinner.

Our panelists also warned against jumping too quickly and deeply into new trends, with health marketing a prime example. While health may guide the label-reading crowd in grocery aisles, it hasn’t yet had the same impact on the food-service side. Far more important, according to our panelists, are freshness and value.

Do supermarkets have unique food-service advantages they can play up? They can focus on quality meals that represent good values, local marketing know-how and flexible combinations of meals and sides.

They can leverage the entire store through cross-merchandising and other tactics. For instance, why not promote the same catch-of-the-day in, say, the seafood department and the deli hot case? That would help unify marketing and narrow the consumer’s decision-making process to whether he or she wants to cook that night.

What’s the biggest lesson for supermarkets from this roundtable? One panelist’s comment best crystallized the mood: “We need to keep a focus on what we can do instead of what we wish we could do.”

That kind of mature thinking will sustain supermarket food-service departments and buffer them against volatile restaurant trends.