May 30, 2018
As the foodservice space blurs and intensifies, it’s important for those in that space — grocers, restaurants, c-stores and everything in between — fully understand what consumers really want in order to achieve some sort of competitive advantage. But understanding what consumers find worthy of their time and money — particularly as disposable income hasn’t budged much in decades — is tricky considering the definition of value is personal and varies by generation.
What we do know is this: Value is about more than cost. It also entails food quality and innovation and — perhaps surprisingly considering the high-demand for technology-driven conveniences — service. Grocers are able to compete head-to-head on the food piece, including on innovation, quality and breadth of prepared grab-and-go offerings. But they aren’t the only ones. Culinary innovation has also trickled into every restaurant segment, from fine dining to quick-service and food trucks. If consumers want something unique, they don’t have to look too hard anymore.
Delivering on customer service may take some catch-up work for grocers since restaurants have always functioned on equal parts service and food. Grocers can gain some footing on service by providing more of an experience for shoppers, like special food bars, cooking demos and eye-catching displays. Grocerants — the increasingly popular dining spaces inside supermarkets — generated 2.4 billion visits and $10 billion in sales in 2016, according to The NPD Group. Grocerant visits have increased close to 30% since 2008.
A standard-bearer on experience-driven value is Hy-Vee, which has invested heavily in its Market Grille restaurants that feature sophisticated fare, an extensive wine list and more. Hy-Vee has further differentiated itself with its urban concept store Fourth & Court, which includes international food stations, a soda fountain and a craft beer bar. CEO Randy Edeker noted last year that these initiatives help future-proof the company in the changing grocery landscape.
For the first time ever, Americans are spending more on food-away-from-home versus food at home, putting grocers on their heels. This trend is exacerbated by the rise in online food shopping and an increased focus on food innovation everywhere, including c-stores, drug stores and dollar stores. For traditional grocers to keep pace in the fight for share of stomach, offering a unique experience is perhaps the most valuable proposition there is.