The ‘Culinarization’ of Supermarket Business
A sea change is occurring as to how food retail will challenge its competitive advantage and remain relevant in an era when retail strategy in general is moving away from legacy business models. The telltale signs of change were presaged last year when Amazon shocked the food retail world by acquiring premium-positioned Whole Foods Market.
In June 2017, Mark Hamrick, a senior economic analyst at Bankrate.com, said this about the Amazon-Whole Foods acquisition: “This is an earthquake rattling through the grocery sector as well as the retail world. We can only imagine the technological innovation that Amazon will bring to the purchasing experience for the consumer.”
Whether you think the Whole Foods deal was as monumental as many in the media have characterized it, what remains true is the unstoppable march toward omnichannel shopping behaviors, and the downstream impact that will have on food retail strategy.
This event, like the shift of shopping patterns to perimeter departments selling fresh, real food ingredients, signals a bellwether change in the future of grocery. It’s likely that ecommerce will continue to disintermediate center store packaged product sales as consumers lean into the convenience of ordering online or through AI and voice-enabled devices.
The legacy store model of selling boxes, cans and bags off shelves at velocity is giving way to a reconfiguration of what optimal retail strategy looks like, into a brave new retail world where success increasingly depends on putting consumer insight at the center of business planning.
‘Culinarization’ of Food Retail
As ecommerce siphons off more center store packaged product sales, how does food retail maximize its relevance and value as a preferred shopping destination? The answer to this question lies in a fundamental understanding of the consumer’s relationship with food. It’s an important and emotional category for people, one that marries desire for health and wellness with hedonic interests in taste satisfaction and enjoyment.
For retailers, this condition foretells the increased importance of fresh food, deli operations and menus, prepared food solutions, meal kits, grocerant businesses, and in-store culinary events.
The continued escalation of premium food-brand sales and category growth provides evidence that food experience matters, assuming it matches and reflects the symbols of modern food culture preferences, which include:
- Fresh, regional and locally sourced ingredients
- Healthier, cleaner ingredient statements and menus
- Chef-inspired cooking techniques
- Globally influenced flavor and taste experiences
- Higher quality, “from scratch or near-scratch” choices
The goal of securing continued relevance and competitive advantage at food retail requires an emphasis on uniqueness and differentiation in store design, merchandising and shopping experience. In many respects, sound strategy requires that management have a strong, personal appreciation for what the consumer is looking for these days: menu and meal solutions.
If consumers increasingly shop for meals and menus, how does the supermarket become a destination for food experiences, rather than just a 50,000-square-foot maze of aisles, shelving and cases?
Supermarkets: Potential Homes of Food Adventure
The “culinarization” of food retail is underway. Consumer expectations for prepared foods from supermarkets remains relatively low, because menus in many places remain locked into a cycle of rotisserie or fried chicken, meat loaf, and ribs as hot-station stalwarts.
Supermarkets can be part of the consumer’s interest in better food experiences when the talent and expertise in the commissary is upgraded, and with it, the menu variety and skills in preparing food. As legendary adman David Ogilvy once opined more than 30 years ago: “The consumer is not a moron; she is your wife.” People know the difference between higher-quality preparations, menu offerings and something less than that.
To secure more of the dinner rush, the most considered and engaged meal occasion of the day for the vast majority of households, better and more vibrant choices need to be created by supermarkets to get and retain that business. The importance of this becomes increasingly significant as the center store future goes online. That said, the opportunities here for retail banners to distinguish themselves are exciting.
Below is some direction for elevating, separating and distinguishing the supermarket brand in an era when food experience has become the barometer of how retail will thrive in the ecommerce world, but first, a few questions:
- There’s a cultural issue at stake here. Can your company embrace food experience as an avocation as much as the merchandise mix and pricing equation?
- Are you as concerned about quality ingredients and culinary-inspired preparations as the nearby restaurants are?
- Are your deli menu and prepared food choices mining opportunities for food adventure, or are you wedded to the old standards that tend to define trading-area perceptions of your strengths?
- Will your menu choices compete head-to-head with local out-of-home dining choices?
If prepared foods is looked at primarily as a shrink mitigation strategy aimed at repurposing fresh products near the end of their case life, you’re missing an enormous opportunity to jump the shark of what’s coming as consumers find shipping a viable alternative for shippable foods.
At Charlie Baggs Culinary Innovations, we’re struck by the ongoing investments that hotel and restaurant companies make in inviting us to help optimize and improve their menus, recipes and operations. Yet food retail seems to follow the lowest common denominator on food experience. What an opportunity is waiting to happen to separate the banner and drive hard on what consumers want in the first place.
- Form a partnership with the Culinary Institute of America, Kendall College, or Johnson & Wales to develop culinary talent for your operation.
- Seek outside culinary expertise to help reimagine your deli menus and commissary operations to improve choices and quality.
- Embrace food experience as part of your business culture, and establish this as a defining characteristic of what you’re in business to provide.
- Invest in training to bring culinary experience and adventure to your aisles, with staff that can help shoppers solve their menu and meal-planning struggles, as well as upsell your product solutions.
Long story short: it’s the food quality and experience that matters. If you can see your business as a home to food adventure, there’s an amazing opportunity to recast your future successfully in an increasingly digital-friendly world.