Consumers have a growing appetite for supermarket prepared-food offerings. In order to benefit from this trend, operators need to focus their merchandising efforts in that area to create convenient, high-quality, meal solutions destinations.
Growth in fresh-prepared foods offered in the retail sector is projected to grow 6 to 7 percent annually through 2017, outpacing forecasted growth in the restaurant industry and ahead of sales projections for the supermarket channel overall, according to a 2014 research report from A.T. Kearney and Technomic.
“The fresh-prepared foods department offers one of the best opportunities to truly differentiate,” the report states. “It also brings higher-margin categories that can serve not only as a traffic driver but also as a potential growth avenue and profit center that will be critical for retailers to survive in today’s environment.”
Whether for immediate consumption or a future at-home dining experience, ready-made meals have been an important add-on to the baskets of shoppers for the past several years.
“The biggest opportunity supermarket operators have to continue to capture a greater share in this category is to drive incremental sales from shoppers with improved merchandising that makes bundled meal purchases more convenient.” — Sarah Tabb, Brand Manager at Coca-Cola North America
“The lowest-hanging fruit from an opportunity standpoint is for operators to convert shoppers who are already inside their four walls, but aren’t buying from their deli or prepared foods section,” she adds. “Even driving an incremental percentage point from existing shoppers that go through the deli could drive millions of dollars in extra sales in a year.”
According to Tabb, driving existing, in-store traffic to the deli or other areas offering meal solutions hinges on deploying strategies that appeal to the needs of time-starved shoppers. The prepared-foods area of the store must become a “destination within a destination.”
Fresh and Clean
Creating a go-to destination within the store begins with the overall appearance of the area — having a department that is kept clean and conveys an aura of freshness and high quality is paramount, even more important than the price of the offer.
The A.T. Kearney/Technomic report notes that retailers “must employ high-impact merchandising strategies that clearly convey freshness to shoppers.”
Tactics to convey freshness could include indications that the dishes are being prepared in-house — through signage, open cooking stations or aroma — evidence of frequent replenishment or rotation, see-through packaging, and product labeling that indicates when an item was made rather than when it expires, the report explains.
Creating permanent fixtures within the deli or prepared-meals area that accommodate entrées, sides and beverages is another strategy that can help drive sales of grab-and-go meals.
She cites one large retailer that worked with Coca-Cola to create such a fixture for its rotisserie chicken offering that included merchandising space for side dishes and 2-liter bottles Coca-Cola. Another retailer offers special bags next to the rotisserie chicken display designed to accommodate the entrée and sides, which are displayed next to the chicken along with Coca-Cola beverages.
Diversity and Convenience
Successful retailers also have broadened their prepared-meals offering beyond rotisserie chicken and pizza with ethnic dishes and other fare. Tabb says she sees the potential for more variety coming out of retailer delis, with opportunities for such dishes as barbecued ribs, chicken tenders or seasonal items.
In the deli, where the retailer might be seeking to promote immediate consumption of items like sandwiches with chips and a beverage, adjacency also is key.
“The trick is convenience — everything has to be merchandised in one place,” Tabb says. “If the shopper has to look for it, they probably won’t. They’ll just grab the sandwich.”
Another effective tool for merchandising is to create a brand around the meal solution, as Coca-Cola has done with several retailers, and then promote the offering at multiple “points of inspiration” throughout the store.
“What we have found is that the more points of inspiration, the bigger the bang,” Tabb says.
In addition to leveraging meal solutions to drive incremental sales within the store, retailers have an opportunity to drive traffic into their locations by offering dinner solutions to capture some of the many last-minute dinner business. These can be promoted with tools like billboards and drive-time radio ads.
Tabb cites research showing that one hour before mealtime, nearly 60 percent of shoppers do not know what they will have for dinner on any given evening.
“That’s a huge opportunity that retailers should capitalize on – to become a reliable everyday destination for easy prepared meal solutions,” she says.