Supermarket Prepared Foods Sales Expected to Surge

Consumers are sourcing their foodservice needs from a wider array of locations than ever before, and supermarkets are cashing in on this trend, according to several reports.

Market research firm Packaged Facts’ new report, “Prepared Foods and Ready-to-Eat Foods at Retail: The New Competition to Retail,” predicts that supermarket sales of prepared foods will grow to $14 billion by 2011, largely motivated by consumers migrating away from restaurants during the recession in search of value and one-stop-shop convenience.

“We see a lot of momentum here and expect growth of 7 percent from 2010 to 2011, which is a pretty monumental surge in a supermarket industry that has been accustomed to losing share,” says David Morris, the report’s chief analyst.

The study shows two distinct groups gobbling up supermarket-prepared foods: those who seek low-cost, quick alternatives out of necessity or convenience and those who see the prepared foods as an alternative to home cooking. Both groups have long been primary clientele for the quick-service category, heightening restaurant concerns in an already challenging environment.

“This is not a new trend, but we do see this is at the year that grocery stores put this strategy at the forefront, which should be a competitive concern for restaurants,” Morris says.

Suzanne Long, a grocery retail analyst with New York-based SSA & Company, says, “There’s been a huge trend toward this for years now, but the retailers are looking far more at sales and market share over profit. Grocery stores feel as if they haven’t come close to achieving their goal of grabbing greater market share, so there’s absolutely a continued push.”

The Food Marketing Institute’s recently released report, “2010 U.S. Grocery Shopper Trends,” shows that shoppers’ interest in supermarket ready-to-eat foods is at 55 percent, which is its highest point in four years, especially among those who are choosing to save money on eating out by cooking at home: They are especially interested in:

• Freshly prepared, heat-and-serve food to take home (47 percent)
• Made-to-order sandwiches (37 percent)
• Extensive salad bar (37 percent)
• Prepared hot food buffet (34 percent)
• Restaurant/sit-down area in-store (23 percent)

Technomic’s new study, “2010 Restaurants & Retail Report: Segmenting the Food & Beverage Consumer,” indicates that retailers continue to move into the restaurant sphere evens as restaurant companies extend their brands with retail product offerings, Many retailers are using the restaurant sector as a blueprint for innovation as they seek to keep value-conscious consumers coming through the doors.

“Restaurants consistently provide consumers with foods that respond to their changing preferences and ideas of value. Locally sourced ingredients, organic and additive-free foods, and humanely sourced menu offerings have been growth areas,” says Darren Tristano, EVP at Technomic. “In a down economy, retailers gained a larger share of the foodservice market, but in order to keep that as the economic structure improves, they need to respond to consumers as effectively as restaurants have.”