The Meal Kits & Retail Grocery BattleSubscribe to Insights
As a dad who prizes the sit-down family meal, I understand that simply getting the food to the table is a chore, per the opinions of my resourceful wife and my ambitious, 14-year-old daughter. Meal kit companies like Plated and Blue Apron are well aware of this household pain point. From meal planning to grocery shopping—add to that, cooking and cleaning—the Bureau of Labor Statistics shows women are spending about 48 minutes on food prep and cleanup a day.
Meal delivery services have honed in on this opportunity and are offering new, innovative options. And they’re keeping consumers out of the grocery store. According to the Understanding Fresh Food Subscription Study released by Technomic earlier this year, “the global ‘meal kit’ market has topped $1 billion in 2015 and is positioned to change the way consumers think about food at home.” For the marketing minds of retail grocers, the real task is to figure out how to solve these household pain points and keep consumers shopping in the store aisles. Why not in-store grocery meal kits?
Opportunity for Retail Grocers
Both convenience and reasonable pricing of home delivery meal kits are disrupting food consumption norms, creating serious competition for retail grocers. With Blue Apron, a family of four can buy a meal kit for around $8 per serving, which is competitively priced, especially as compared to restaurant dining. Yet, premium-minded consumers may be willing to pay more in meal kit costs because of the convenience and quality they receive, recognizing that the meals still require the work of prepping and cooking the food. Ultimately, meal kits are silencing the what’s for dinner question, especially among affluent, time-crunched shoppers. Now, busy families have no need to meal plan or visit the grocery store as often. This saves valuable time and provides a new culinary experience with their families.
However, there are a few issues with meal delivery services that retail grocers can leverage to their advantage. With meal delivery services, consumers have to order meals in quantities of two, three, or four servings. The meal delivery model doesn’t accommodate larger families with a higher volume or spend, and it adds another layer of complexity for these group sizes, a tarnishing “ding” to the convenience factor.
Grocer Innovation Is Key
The premium market is ever evolving, and to capitalize on this new consumer shift, grocers will need to innovate to attract and keep consumers coming back to their stores. Grocers will need to invest in solutions that involve more than selling groceries at a cheaper price point. Premium-minded consumers desire the convenience of quality ingredients—expertly crafted to build delicious meals—while having the ability to enjoy and learn from the culinary experience. By solving these consumer pain points regarding convenience and healthy ingredients, grocers can create an attractive environment for premium-minded consumers.
Although many grocers offer heat-and-serve meals and deli counter selections, meal delivery options are driving consumers to look for more of an emotional connection through cooking. Grocers, especially the premium ones, need to target consumers who are looking to answer the question, what’s for dinner, and who are willing to spend more on properly portioned, quality ingredients. To do this, grocers must exploit weak points within the meal delivery models to offer consumers improved options, such as:
- Provide whole-meal options, such as right-sized meal kits ordered ahead for in-store pickup. This provides shoppers the quality, variety, and convenience they’re getting from online solutions, while driving traffic to stores. Without that foot traffic, there’s no chance for impulse buys, which grocers know are critical to improved sales and better margins.
- Use less packaging than the delivery-to-door competitors. If you’ve used any subscription model for meal solutions, you’ve had to deal with all that packaging, which can feel like a waste and a burden. Grocers’ ability to keep food refrigerated until pickup could overcome the most inconvenient part of the online meal kit.
- Leverage your local accessibility by knowing what your customers may want to serve for dinner. Blue Apron doesn’t know there’s a regional championship game this weekend, and that tailgate kit or prize-winning chili recipe could fit the bill for eliminating the what’s for dinner question. Grocers must not underestimate the advantage of knowing the customers they see face-to-face.
In all, turning a blind eye to these emerging trends and innovative threats could be troublesome for retail grocers. As more meal kit options become commonplace among premium consumers, brick-and-mortar grocers will lose out on a profitable share of the market if competitive solutions aren’t offered. In fact, according to Blue Apron’s Founder and CEO, his hope is that people never have a reason to go to the grocery store! We suggest grocers wake up and start leveraging innovations to offer competitive solutions that attract and retain consumers. The market is ripe for in-store solutions. Is your brand ready for the challenge? This dad sure hopes so!Subscribe to Insights