Eye On The Prize

Savvy grocers can capture a greater share of consumer food dollars by building meal solutions around dayparts.

Reflecting on the supermarket business today, you may think of the oft-quoted line from Dickens' "A Tale of Two Cities": "It was the best of times, it was the worst of times." In response to the current economic climate, consumers are changing their lifestyles and spending patterns. For some retailers, this may result in market erosion. But for those enlightened and open to change, it can mean opportunity.

As reinforced by the Coca-Cola Retailing Research Council's (CCRRC) latest study, "Eating In: Growing Sales by Helping Customers Eat at Home More," conducted by the NPD Group, shopper behavior is being shaped by powerful motivations. Consumers want to save money, stay healthy and strengthen family ties. Yet, at the same time, they crave convenience and are challenged to please all those they feed.

In Part 1 of this two-part series, "Keep Your Customers at Home," published in the June 2010 issue of Progressive Grocer, the case was made that consumers no longer approach retail outlets with a list of needed items. They think in terms of meals and occasions — not products — and shop accordingly. Armed with such insights, grocers can capture a greater share of consumer food dollars by focusing on meal solutions and dayparts. Compelling data reveals that such action can deliver great financial rewards, while inaction can cause a supermarket to be considered "old school" and fall out of grace with shoppers.

This follow-up article examines what supermarkets can do to further evolve their business practices; how every stage of mealtime — preparation, cooking, eating and cleaning up — presents opportunities to assist customers; and, in turn, how that can translate into ways that grocers can drive greater sales and loyalty, and, ultimately, sustain business now and in the future.

Ken Waller, EVP and chief administrative officer for West Des Moines, Iowa-based Hy-Vee, which operates 230 supermarkets in seven states, believes the "stars are aligned" for grocers to grab market share. "People are interested in food," he notes. "They're watching the Food Network, and the economy is driving people to shop in stores and eat at home. On top of that, consumers are focusing on their health and eating properly. The best way to control what you put in your mouth is to buy and prepare the food yourself."

Waller thinks lifestyle changes — driven by dollars and waistlines — coupled with information from the "Eating In" research, arm grocers with the ammunition to keep cash registers ringing and customers coming back. "The CCRRC study is easy to understand, and its recommendations are simple to implement," he says. "The facts and data help retailers identify what they need to do to increase meal consumption at home. There's no better time than right now for us."

One key component of the study is the emotional attachment that customers have to the "daily meal clock." Findings reveal what consumers look for when preparing and eating breakfast, lunch and dinner, as well as how to build business around these preferences. Depending on his or her mindset or the daypart, a shopper may have different needs, and it's in the grocer's best interest to understand and meet them.

"The same person can have very different motivations for three meals during the same day," explains Michael Sansolo, former Food Marketing Institute SVP and incoming CCRRC research director. "This is important because — as the numbers documented in the study show — dinner is the must-win opportunity, yet the potential sales gain from breakfast and lunch is actually as large. In short, each meal occasion should be considered, and winning solutions presented to shoppers, in order to build profitability."

As addressed in Part 1 of this series, dinner is clearly a sales generator. But a supermarket that fails to capitalize on opportunities around breakfast and lunch does so at its own peril.

A cup of Joe Keeps 'em at Home

Breakfast is all about routines and rituals, and increasingly about starting the day with a healthy meal. Breakfast foods account for 8 percent of store sales, and 76 percent of all breakfast meals are prepared and eaten at home. "In spite of such a significant contribution to the top line, most retailers miss the chance to build business around this daypart," says Joe Derochowski, executive director, business development food & beverage at the NPD Group, based in Port Washington, N.Y. "To increase market share, a grocer can work to attract consumers who purchase food from other outlets or skip breakfast, or leverage the growing number of people who eat on the run."

What does it mean that breakfast is all about routines? Unlike lunch and dinner, people tend to eat the same breakfast every day. For some, it's two scrambled eggs and toast, while others scarf down cold cereal. Breakfast is often a solitary meal where many take a moment to eat, catch up on the news and prepare for the day ahead. The ritual is the same and, usually, at its center is coffee.

"Simply put," says Derochowski, "if you can get shoppers to have their coffee at home, they will eat breakfast at home. Otherwise, you've likely lost them."

The key is to tap into those routines and to build some mealtime excitement by showing ways to make breakfast a little more interesting. "Breakfast should address people's need for ritual, health and speed," observes Sansolo. "Whatever is served has to be simple to make and easy to consume. However, there can be one really interesting element: coffee. "Although mornings are rushed for most, people are willing to stop for their coffee. A big idea for supermarkets is to stake their claim on this front. If consumers stay home to enjoy that cup of special coffee, it means they also will eat breakfast at home, and all sales will stay in the supermarket channel."

After reading the CCRRC study, Marc Poulin, president operations, Quebec region for Stellarton, Nova Scotiabased Sobeys, huddled with his team to brainstorm ways to encourage at-home coffee drinking.

"We worked on selling k-cup coffee machines that brew a single cup of coffee," he recounts. "Sobeys made it easier for shoppers to buy these appliances and ran promotions to stimulate interest. We suggested that brewing a great-tasting individual cup of coffee is simpler, less messy and more convenient than other options, enticing customers to stay home and enjoy breakfast. The results? Just what we hoped for, as sales are up on coffee and other breakfast items, too."

Two other trends also drive breakfast sales: eating healthier and eating on the run. The more retailers can do to drive healthier eating — during all meals — the better. It shouldn't be a surprise that better-for-you breakfast sales are growing, led by hot cereals and yogurt.

Meanwhile, capturing sales from those who eat on the run is a growing and sizable market. The number of breakfasts taken from the house and consumed elsewhere has tripled, while the quantity of breakfast foods purchased at a restaurant and eaten while in transport has quadrupled. These trends suggest opportunities around portable foods that travel well and can be eaten as midmorning snacks, such as pre-cut fruit and breakfast bars, which can provide financial gains and are likely to produce repeat business.

Can't get no Satisfaction

Lunch is a challenge for consumers because it's the meal with the most tradeoffs. Whereas both breakfast and dinner are planned meals, lunch — especially for those at work — often isn't. This meal is driven by speed, taste and convenience, as well as a growing interest in health. Too often, people who don't have a lot of time for lunch simply resort to grabbing a quick bite and sacrificing some of their other needs.

It takes time and planning to curb this midday habit and secure a tasty, affordable, quick and healthy meal. As articulated in the CCRRC study, for most, lunch is a compromise. This presents an opportunity for grocers to address what the consumer is willing to sacrifice for satisfaction.

And it's a challenge worth meeting. "Supermarkets that capture more of the lunch market can add $4,100 in incremental sales per week," notes Derochowski. "From the shopper's perspective, supermarkets can fill at-home, carried-from-home and away-from-home lunch needs. One approach may be to induce the 6 percent of the lunch market who skip the meal altogether." Touting frozen products, easy preparation and energizing afternoon snacks may be what it takes.

While coffee is at the center of a breakfast program, lunch is built around the sandwich. Consumers want sandwiches, they want them quickly, and they want them to be healthy. Sales of frozen or prepared sandwiches have quadrupled over the past couple of years.

"Sandwiches are No. 1 for lunch, especially the ham sandwich," notes Mike Jackson, retired president of Minneapolis-based Supervalu, Inc. "Grocery stores can mix it up and offer a sense of excitement by serving paninis or using interesting breads. Also, lunch provides greater variety than breakfast. There is a lot to choose from at a grocery deli, including numerous healthy options."

In addition to grab-and-go selections from the deli, retail stores increasingly attract a sit-down lunch and dinner crowd. "Lunch depends on speed — a quick in-and-out," says Hy-Vee's Waller. "More people are brown-bagging it to conserve finances, and that creates an opportunity for grocers. Many of us have a food court where customers can pick up Chinese or Italian food, pizza, numerous varieties of chicken, a salad bar, and other favorites. Customers may select hot and cold meals without sacrificing convenience and speed, through checkout at registers located at each food station or in the food court."

Sobeys' Poulin acknowledges that for many people, lunch is a time for socializing. "That's fine," he emphasizes. "But, on the other hand, supermarket offerings are frequently more reasonably priced and healthier choices than other options. And our patrons often eat their freshly prepared meal in the company of their colleagues in a workplace dining or common area. This lunchtime solution is especially popular with workers located in suburban areas."

Complacency is not on the Menu

It's a given that people are going to buy and eat food. The question — and it's more than a $64,000 question — is from where?

"Grocers can win back market share from restaurants, but we have to get over our sense of complacency," says Jackson. "Retailers must recognize that traditional foodservice operators are our real competition. We spend too many resources positioning ourselves against each other, while others take a huge portion of our potential business."

Poulin suggests: "We need to attract those heading to restaurants because they're too busy to plan or too tired to make a meal. Our industry has let restaurants be the practical solution. We've allowed restaurants to cook our customers' food by default. I say, 'No more.' If we put our minds to it, we can gain back market share."

Although many consider that knowledge is power, it's more likely what you do with it that will lead to success. Grocers who review the CCRRC study will learn what motivates consumers during specific dayparts, as well as ways to satisfy today's customers' needs.

"It is up to us to go to our merchandise and operation teams, have them read the study, and come up with ideas," says Poulin. "Once the creative juices are flowing, profits will follow."

Grocers need to reframe the way they present meal solutions and play to shoppers' desires for affordability, convenience, family connections and healthy-for-you choices. How can retailers expedite this tall order? Maybe it will take novel approaches. Thirty years ago, there were no in-store pharmacies or on-property gas stations. Now these are staples of many supermarket operations. Success may depend on creativity and serving shoppers in never-before-done ways.

The full study is available at www.ccrrc.org.

This is the second of a two-part series by Bill Bishop, chairman of Barrington, Ill.-based Willard Bishop, LLC, and research director for the Coca-Cola Retailing Research Council (CCRRC). Part 1 of the "Eating In" study overview appeared in the June 2010 issue of Progressive Grocer.

Business-building Opportunities

BREAKFAST

• Showcase seasonal promotions like "Healthy breakfasts for winter mornings"
• Promote tasty and healthy options with manufacturer tie-ins
• Build awareness of on-the-go foods: energy drinks, cereal bars, vitamin-enriched water and smoothies, plus your own coffee-and-sandwich combos. Further, promote how many of these breakfast items also serve as great midmorning snacks
• Highlight coffee options and explore tie-ins with one-cup coffee makers
• Emphasize cost savings garnered by eating at home on a daily, weekly and monthly basis
• Try selling upscale breakfast items such as freshly baked specialty breads

LUNCH

• Promote ingredients used in popular sandwiches, like ham or peanut butter and jelly
• Help consumers build more frozen items, such as sandwiches, into their routines
• Make it easy for people to purchase portable lunch items, including single-serve soups and pastas, refrigerated sandwiches, and yogurt. And don't forget the opportunity to merchandise sandwich and lunch bags, too
• Explore ways to get the lunch crowd served quickly via deli and checkout kiosks, call-ahead orders, or eat-in buffet offerings
• Feature afternoon snacks such as cheese, energy bars, and vegetables and dip