Photo: Wegmans
Millennials love their grocerants
Back when our adult-age children were still in grammar school, they loved going to the local Wegmans. Every big shopping trip seemed to start with us grabbing pizza slices, sandwiches or some ethnic food dish to take upstairs to the seated dining area where we bonded and watched others shopping in the massive store below. We rarely left Wegmans without buying various heat and eat items for that night’s meal. To this day, our kids think of particular supermarkets as go-to places for their takeout meals.
According to a new NPD Group report, “A Generational Study: The Evolution of Eating,” many Millennials have similar tastes when it comes to prepared meals from supermarkets. As a group, they give grocers higher marks for freshness and quality than their quick service restaurant competitors.
While the report says Millennials purchase prepared foods from grocery stores less frequently than their Boomer parents, the channel is “gaining traction” among the younger demographic.
“Millennials’ interest in the benefits and experience supermarket foodservice offers will continue to be strong over the next several years,” said David Portalatin, vice president, industry analysis at NPD Group, in a statement. “This forecast bodes well for food manufacturers and retailers who have their fingers on the pulse of what drives this generational group. Give the Millennials what they want — fresh, healthier fare and a decent price — and they will come.”
Discussion Questions
DISCUSSION QUESTIONS: How do you see the demand for prepared foods changing supermarket operations in the years ahead? Should all grocers make prepared foods a point of business emphasis or is it best left to more upscale operators such as Wegmans?
Poll
BrainTrust
Tony Orlando
Owner, Tony O's Supermarket and Catering
Jerry Gelsomino
Principal, FutureBest
This article is near and dear to my heart. Wegmans has been and always will be a fresh paradise for customers to shop, and I give them a five-star rating for how they run their stores. Whole Foods has nice stores as well, and I am going to focus on the independents as well. When I travel, I always end up going into a supermarket/deli that has a good rating on Yelp, whether I am in Napa Valley or Hilton Head. There is something special about a well-run local store that really knows how to showcase prepared foods and bakery, and I am there to enjoy, buy and learn as well. About eight years ago we converted to 100 percent scratch-prepared everything in our entire deli case, with top-quality ingredients. I am glad I did, as we have created a niche that no one else around can duplicate.
Yes it is labor intensive, but the loyalty to our signature entrees, salads and desserts is off the charts, and we price it fairly to keep them coming back. Our bakery also has signature items, such as extra gooey iced cinnamon rolls and pepperoni/cheese soft bread sticks, which sell like crazy. My point is that this type of setup keeps growing in sales and profits, while the staples in the center of the store have been steadily declining. There will always be a strong demand for high quality foods to-go, and it takes a huge commitment from anyone who chooses to go this route, but believe me it keeps the customers coming back, and that is what all of us in business need. I wish I had even more room to increase the selling space, but we are still growing our deli/ bakery, and customers never get sick of eating high-quality foods. My advice to stores looking for growth is to take a hard look at your deli/bakery and make it so special that your customers keep coming back for more.
Many Millennials believe that the QSR industry does not serve healthy food and so they do not eat there. Almost never! So the home meal replacement items in supermarkets are on a comeback and very strong. Many supermarkets do see this trend and are making plans to include more HMR items with each remodel and new stores. All stores will have some form of HMR items and, like the stores today, some will do a great job and some will not get the message right. Wegmans, Publix and many smaller gourmet chains will do it right and others will need to learn the trade but all will need to meet the demand going forward.
Grocers of all formats need to continue to feature ready-to-eat solutions. This broad category has ebbed and flowed over the decades, however it has never gone away. With consumers’ time being more at a premium than ever before, the need continues to grow for all shopper demographics.
I am with Tony — especially on the gooey rolls. Millennials always want things healthy but it won’t increase their lifespan by much. They will learn that all the cash they wasted on organic, etc. did not help when they become Boomers like us.
I still see a large number of Generation X and Millennials at Wendy’s and McDonald’s. They will never turn down a taco from the Bell. So let’s not get too excited about this topic. More groceries will change — as Kroger did years ago to their fresh sandwiches and more.
It is an edge now, but it will fade. Tony’s bakery section will expand when he moves the oatmeal and a few healthy cereals into the gooey roll space. You can eat breakfast any time of the day!
I believe that grocers who offer fresh prepared foods will be in better shape to grow business with Millennials when they make it easier to discern what ingredients are being used (or not used) in the foods. This is a generation that demands information, so why not be more transparent and give it to them?
As a Boomer who would be happy to scratch-cook less often, I find most grocery prepared foods to be WAY TOO SALTY, so I tend to avoid them! The counter help doesn’t really have enough information to inform a healthy shopper!
I love grocery store restaurant options. Wegmans, HY-Vee, H-E-B Central Market, Mariano’s and Whole Foods are my top picks. Good, affordable and no tipping. Signature items are key to differentiating.
There’s no better experience than rushing into the grocery store to grab a few items to complete dinner and seeing a freshly made option that gets me back on schedule and that resembles a real meal (unlike what I had planned). All grocery stores that are trying to increase business should look into the potential of offering more prepared food items with some kind of social environment. I’ve found that the local grocery stores that have added restaurant-type offerings, wine/beer sampling and coffee shops have created a comfortable, community environment and always seem to be busy … which is the point, after all.
The demand for prepared foods from supermarkets make perfect sense. The menus are widening, ingredients are on display and supermarkets are usually strategically located to be nearby. The convenience of prepared foods, along with healthy choices, is a strategy all supermarkets should adopt.
No one has a monopoly on prepared foods however some, like Wegmans, have been at it for a long time and have explicitly emphasized it in their stores. There’s a serious learning curve to such an operation and it’s too easy to see large gross margins turn into net losses.
Prepared food has been and will continue to be a differentiator for supermarkets despite presenting a completely different set of operational and systemic challenges. I expect more supermarkets will be investing in prepared foods as an alternative to QSRs for healthy eating as well as providing a casual and comfortable gathering point. Perishables as a whole are a surefire way to differentiate the supermarket from other competitors and prepared foods can also provide a solid defense against being “Amazon’d.”
Supermarkets will need to rethink their approach here and make the technology and process investments necessary to develop these new capabilities and deliver a new customer experience in their stores.
Grocers definitely need to act more like fast casual restaurants, if they’re not already. But unbeknownst to most people is the challenge they face with labor. Most grocers are union, and it’s very difficult to run a fast casual restaurant with union labor for all the obvious reasons you can think of.
So, should grocers think/act more like restaurants? Yes, especially like fast casual restaurants. Can they actually operate like restaurants? For most traditional grocers, not under current labor conditions. That’s why someone like Whole Foods (non-union) can do food service so well. Don’t get me wrong, I’m not anti-union, those are just the facts.
Supermarkets will continue to morph over the coming years, as they grow their deli and sell more prepared foods to their clients. Recognizing this shift in offering more premium, prepared foods indicates the ability to adapt, rather than perish. Poor performers in this segment won’t be dynamic enough to accurately reflect the changes in tastes of their clients.