The rise in ready-to-eat: grocers adopt restaurant tactics

The ‘grocerant’ model is going mainstream, driven by consumers who want quality, convenience and reasonable prices

Like hip sectors such as the high-tech industry, the food industry is developing a lingo to describe market shifts. The term ‘grocerant,’ a combination of grocer and restaurant, has been around for a few years but is going mainstream now.

Grocerant accurately captures an emerging food industry trend.

According American market researcher NPD Group, grocerants generated 2.4 billion new visits and more than US$10 billion in sales in 2016. That’s a massive shift. We haven’t seen numbers like these in the food convenience realm since the drive-through phenomenon exploded several decades ago.

In Canada, we’re seeing similar trends. Many retailers are on the move.

Convenience has more currency than ever, like in the ready-to-eat spaces at grocery stores that cater to people seeking portable solutions to their hectic lives. An increasing number of grocery stores allow customers to buy and eat on the spot, merging food retailing and food service. Grocerants offer one-stop-shopping for consumers driven by curiosity or a lack of time.

Research suggests many consumers perceive grab-and-go food to be healthier than meals at restaurants. This works well for grocers.

Price wars are also driving grocers to become grocerants.

Over the last 15 months, Canadian food retail prices have barely moved. But the price of food purchased at restaurants has increased significantly, more than double the general inflation rate. This suggests menu prices are much more immune to market cycles than retail food prices. Demand in food service is more elastic, so margins can be kept up and defended, no matter what the economy is doing.

But restaurants aren’t staying quiet in the face of this new trend, introducing technology to fight back. Many are using UberEats, offering meal kits and developing omni-channels. They’re trying to go where the money is instead of waiting for the consumers to come to them.

Some say it’s all about the millennials – offering fresh, healthy, reasonably-priced products for a large generation that’s slowly taking over the  economy. And certainly, millennials were the first generation not willing to put up with what was being offered to them.

But the changes are more deeply rooted.

Millennials certainly have the economic influence to trigger the changes we’re seeing, but many demographics are behaving differently about food. Families with older children don’t mind the enhanced experienced while baby boomers want and need the convenience.

Grocerants represents the awakening of an industry that’s been dormant for some time.

Similarly, the ready-to-cook market is emerging, but not without headaches.

In the U.S., Blue Apron, the largest and most well-known meal-kit provider in the world, is waging an uphill battle. The company just laid off six per cent of its staff and its stock has gone nowhere since going public in June.

On the other hand, grocers seem to like what they see from meal-kit outlets. Grocers can cover a broader market with product offerings but until now haven’t made much of a play on meal delivery and quality. They’re often not hardwired to meet this challenge. This is slowly changing.

Meal-kit company Plated was recently acquired by the grocery giant Albertsons for approximately $300 million. And Metro acquired Miss Fresh earlier this year. Other grocers are expected to follow suit.

As consumer expectations and behaviours shift, and as big grocers get involved, stand-alone meal-kit outlets will likely disappear.

The trend is also altering the processing industry. Campbell Soup Co., Unilever and others are investing in meal kits.

This is clearly a growth opportunity – some expect it to be a $10-billion industry by the end of next year – so it can’t be overlooked by grocers.

Grocers must hire the right people, with the right mindset, to capitalize on these opportunities.

The emergence of grocerants shows that the industry is listening to the modern consumer.

So the convenience food battle is alive and well, and should last for quite a while.

Sylvain Charlebois is Senior Fellow with the Atlantic Institute for Market Studies, dean of the Faculty of Management and a professor in the Faculty of Agriculture at Dalhousie University, and author of Food Safety, Risk Intelligence and Benchmarking, published by Wiley-Blackwell (2017).


grocerant, ready to eat, restaurant tactics

The views, opinions and positions expressed by columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of our publication.

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