Most consumers live life in a blur and they desire products that help them save time and gain a sense of control. The need to recover a sense of control influences many buying decisions in the intensifying pursuit of quality, convenience, customization and well-being. Companies and brands across all sectors are creating new products and services that promise to return this sense of control. Supermarket retailers are part of this movement, providing consumers with solutions for eating well in ways that satisfy their need for convenience, global flavors and customization. One of the most significant ways is through fresh prepared foods as meal solutions.
Background
In 1985, there were about 500,000 foodservice and retail grocery outlets in the United States. By 2015, the number of outlets had almost tripled to 1.4 million total outlets. Not surprisingly, during this period, total food sales grew from $434 billion to almost $1.4 trillion and consumers spent almost equal amounts on each segment, as shown in this excerpt from “The Why Behind the Dine” (Acosta/Technomic).
As the Acosta/Technomic report points out “today, consumers can leverage more than a dozen approaches to purchasing, preparing and consuming a meal. Acosta’s graphic below depicts the explosive growth in the number of outlets giving consumers’ abundant choices for what, how, when and where to eat.
The growth of prepared foods in supermarkets
While retailers have aspired to grow sales of their fresh prepared foods (also called retail meal solutions) for years, sales in the segment have recently begun to take off in supermarkets. Technomic reported that sales of fresh prepared foods in supermarkets topped US$28 billion in 2015, making it one of the highest performing and fastest growing segments in the food industry. It is projected to outperform the rest of the food industry in 2017.
Datassential reports “consumer perceptions of supermarket prepared foods have been rising. The top two reasons consumers say they are purchasing more prepared foods are because of improvements in the variety and the quality of prepared foods” and the Technomic research supports those findings.
Top Influences in Decision to Purchase
The Technomic report found that lower prices and the convenience of buying groceries and a meal at the same time encouraged consumers to choose RMS over a restaurant. Other top influences in the purchase decision included being too busy or tired to cook, use of premium ingredients, healthful options, freshness indicators, cleanliness (which impacts perceptions of food safety) and variety of items offered.
Sustaining Growth
Retail foodservice is one of the fastest-growing segments in the industry and as retailer meal solutions quality perceptions continue to improve, they are positioned to further steal share of stomach from restaurants. Retailer efforts to enhance the in-store experience are causing some consumers to recognize prepared-foods areas not just as quick sources of meals but also as destinations.
To sustain growth, retail operators and their suppliers will need to innovate with new dishes featuring seasonal, ethnic, and unique flavors as competition escalates. Stand-alone RMS concepts are emerging, while an ever-growing number of restaurants are rolling out grab-and-go and delivery options – all of which will encroach on RMS’ quick, convenient occasions.
In addition to increasing convenience and variety, a key area of opportunity for retailers lies in offering more healthy options. The majority of consumers purchase foods with health-halo claims more often at grocery stores than at restaurants and as more consumers look for more healthful prepared foods, retailers should consider offering more fruit and vegetable dishes as well as utilizing more preparations that are healthful. Emphasizing the healthfulness of their dishes could help retailers position their RMS offerings as a nutritious replacement for home-cooked meals.
