Food Service at Retail: Grocerants explores what consumers want and how to maximize the evolving grocerant opportunity with Wade Hanson, principal of Technomic. Did you know chefs and analysts are teaming up at progressive operators?
Food Service at Retail: Grocerants: Why should supermarkets and convenience stores pursue the grocerant opportunity today?
Wade Hanson, Technomic: Simply put, retailers should be pursuing fresh prepared foods because a) it is where the most significant growth opportunities exist, and b) the consumer has shown a strong and growing affinity for the foods and beverages being offered by leading retailers.
As retailers are engaged in strategic planning activities, they should be acknowledging the shifts in consumer behavior and allocating resources to the perimeter as appropriate.
FSRG: Which trends - in eating and retail competition - indicate the time is right for these channels to invest in these concepts?
Hanson: The food industry, including retail and foodservice, has to respond to the consumer demand for fresh – or perceived fresh – foods. Consumers are showing an unwillingness to spend on foods thought to be heavily processed in light of all of the fresh alternatives available to them.
FSRG: What do in-store diners want most?
Hanson: There are two distinct groups of shoppers when it comes to fresh prepared foods. First is the group of shoppers that buys items to go. This group wants convenience, value, variety, and quality. The second group looks for an in-store experience. In addition to the factors important to the to-go shopper, this group wants an atmosphere with similar characteristics to a restaurant or café. Younger consumers, in particular, aren’t willing to ‘lower the bar’ for a dining experience just because they are in a supermarket. In turn, we see things like beer and wine service, cooking demonstrations, free wi-fi, musical entertainment, and late-night menus emerging in supermarkets.
FSRG: Therefore, where should grocerants focus on differentiating to drive more trips and encourage consumers to stay longer in the store to buy more?
Hanson: It starts with the food. Consumers have a massive amount of choice today and will only frequent the retailers that put forward good food consistently. Assuming a dedication to quality, retailers can appeal to consumers by understanding culinary trends and serving customers fresh meals that reflect those trends. So that may mean more ethnic cuisines or dishes that best show a regional flair. That may mean taking a traditional meal and adding a twist on the familiar. And the idea of customization can’t be overstated. Consumers of all ages and income levels want food prepared just as they like it. Made-to-order offerings will only continue to grow in importance.
FSRG: How should grocerants curate their themes and menus?
Hanson: It depends on the retailer. At Technomic, we have identified four different tiers of supermarket prepared food programs ranging from the most advanced to those hanging on to a limited, traditional selection of grab and go items. Each of the tiers operates on a different level in terms of menu, branding, merchandising, and execution. The most advanced tier, for example, focuses on a highly curated food program that reflects the vision of the overall store and demonstrates to their customer that they understand their lifestyle and dining preferences.
FSRG: How cohesive should grocerants be with the rest of the store to cross-merchandise and embellish fresh, innovative image?
Hanson: A cohesive vision and store design is critical to a fresh prepared food program. Consumers are savvy and perceptive. If little within a particular store demonstrates a commitment to fresh, local, or innovative, then the consumer will likely not perceive the perimeter to hold a commitment to fresh, local, or innovative no matter the marketing in that area of the store. Research has recently shown that the perceptions of a fresh prepared foods department impact the perceptions of the total store. And interestingly, the reverse is true as well.
FSRG: How ready are chefs to run grocerants? How can supermarkets and c-stores help expand their skills into this business most effectively? How key is a grocerant chef to a store's total success?
Hanson: Many chefs that enter the retail world go through an adjustment period. The hours, the kitchens, the customers, the staff training level (and on and on), are quite different in most cases. But stores that have brought in executive chefs are looking to break the mold and are committed to culinary creativity. Leading chefs appreciate that challenge and see positives in the experience of working at retail. It is important to recognize, however, that it is not just culinary professionals being brought into the fresh prepared foods space. More analytical professionals are also entering these departments and are partnering with chefs to develop great menus in the most efficient and cost-effective manner.
FSRG: What can NRA Show do to help grocerants be more successful?
Hanson: Information. Direction. Consumer trends. Many retailers have limited access to data and insights. They are operating on anecdotal information and culinary instincts. The NRA Show can become a place for retailers to learn about not only best practices and industry activities, but also to gather hard data on the needs of the consumer and the path to success along the perimeter.