The segment is being redefined with more fine-tuning and overhauls set to followBy Erik Thoresen on May. 30, 2018Seven months after Albertsons’ acquisition of meal kit company Plated, The Kroger Co. followed suit with the acquisition of meal kit competitor Home Chef, with plans to add meal kits to its brick-and-mortar shelves. As it stands today, two of the top four meal kit competitors have joined forces with traditional grocers.
So, what does this mean for the future of the meal kit market?
First, partnering with stores will help both Plated and Home Chef expand distribution and build new customer acquisition opportunities—a critical struggle for meal kit companies. However, the aggressive growth of online grocery serves as a counterbalance to this brick-and-mortar play. One certainty is this: The pure-play subscription model won’t cut it for most incumbents. Flexible subscriptions and on-demand offerings are essential.
Second, despite showing signs of maturation, the meal kit market is still in an experimental phase. The business model and channel strategy will shift for major players over the next 12 months.
For example, both Blue Apron and Chef’d now offer meal kits at Costco. Walmart also launched meal kits earlier this year. Similarly, consumer demand for meal kits at brick-and-mortar retail will create opportunities for smaller, innovative meal kit companies to grow. In the end, “bolt on innovation” isn’t a seamless solution for grocers. Amazon’s various meal kit experiments—not to mention the acquisition of Whole Foods—suggest that new offerings are on the horizon.
Third, and most importantly, customization and user experience are key components of the meal kit market that are still largely unproven in the traditional grocery space. Executing well in these areas will continue to serve as a competitive advantage for all players in the meal kit market.
Simply put, we are witnessing the beginning of the redefinition of the meal kit value proposition, with lots of fine-tuning and some overhauls expected moving forward.