Supermarkets Aren't Just for Groceries Anymore

by Tanya Irwin, Jul 22, 2012, 2:13 PM

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Sales of prepared foods and ready-to-eat foods at retail will reach $32.45 billion in 2012, up 7.5% from 2011, according to Packaged Facts. 

The prepared foods retail net extends across a wide number of retail formats, but supermarkets command majority share. Supermarkets garner 60% of prepared foods purchase visits, trailed by Walmart (15%) and convenience stores (12%), according to “Prepared Foods and Ready-to-Eat Foods at Retail,” a just-released report from Rockville, Md.-based Packaged Facts.

The market for store-made meals and prepared foods -- which include rotisserie or fried chicken, hot pizza, hot food bars with Asian-style entrees, sushi bars, deli sandwiches, and soup and salad bars -- is doing well in this period of economic doldrums.  That’s partly because the cost of meals are not on par with fast food and family restaurant options -- they beat them, making them accessible to a wide range of household incomes.

Strong, high-quality store-brand portfolios are a significant advantage for prepared foods retailers in keeping the price points of prepared foods down, and part of the winning formula. Retailers such as Costco, Kroger, Safeway and SUPERVALU continue to grow and leverage their private-label products in conjunction with developing their foodservice programs, according to the report.

Whole Foods has particularly been a trendsetter in educating customers on health, food and diet. Its Health Starts Here program, Wellness Clubs and Whole Kids Foundation not only serve to educate Whole Foods customers, they also build customer relationships and goodwill, according to the report.

Most convenience store foodservice platforms, on the other hand, still operate under the assumption that the people buying them do not want to put health concerns first. According to Packaged Facts, this ignores the fact that millions of consumers do want to eat healthier fare, and many might appreciate a tasty but healthy option just at the point when impulse and efficiency directs them to a convenience store.

And serving consumers is not just about providing quality, cost-effective, convenient, and healthful foods, according to David Sprinkle, publisher of Packaged Facts. It’s also about providing an atmosphere that draws people in. This is why more and more supermarket operators are integrating “neighborhood” messaging into their strategies, and a reason that big-box players such as Walmart are experimenting with smaller-box formats, he says.

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