Supermarkets Invite Customers Out to Eat

Discussion
Dec 15, 2011
George Anderson

We’ve come a long way. I’m not talking about society or anything on a grand scale. I’m talking about my family’s eating habits attached to grocery shopping.

Consider that we started out buying a hot dog at the end of a Costco shopping trip.

Later we graduated to sandwiches or hot foods, usually Chinese, at Wegmans’ in-store dining area. It was impossible to mention Wegmans without kids asking if we could get something to eat first. They loved getting a seat on the second floor and watching the shoppers move around the store below.

Next came trips to a Whole Foods and dine-in meals at the Osteria Italian restaurant with its locally-sourced foods.

This brings me around a recent Boston Globe piece that discussed the evolution of in-store dining options at supermarkets. Wegmans, Whole Foods and H-E-B’s Central Market were mentioned as grocers that had offered higher quality dining experiences as means to building their brands and driving in-store traffic.

"In the past 24 to 36 months, in-store dining has become heightened, as retailers realized they couldn’t increase the basket size by simply lowering prices,’ Thom Blischok, president of SymphonyIRI Group, told the Globe. "They began these innovations to drive in-store traffic, and change the dining experience — in quality, in atmosphere, and in variety. The ambience of a chef standing back there with the hat in a grocery store said: ‘Ah! I can eat good quality food here at a good price.”

Discussion Questions: Do you see in-store dining as become more important to the marketing efforts of supermarkets? How do you think the more successful operators will approach the management and marketing of in-store dining options?

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14 Comments on "Supermarkets Invite Customers Out to Eat"


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Gene Detroyer
Guest
9 years 4 months ago

The main attraction for supermarkets for the last 70 years has been the products in the core of the store. That is why the people went. Today that core is challenged by online (Fresh Direct, Soap.com), clubs (Costco, Sam’s) and specialty markets (Whole Foods, Trader Joe’s). Every challenge is one less reason to go to the traditional supermarket.

For the retailers to continue to progress, they must find reason for a shopper to come to the store. The answer is not small or promotional changes. The answer is a significant change in thought about what the store is and what brings people there. Be assured, it will not be Pampers, Oreos or Tide.

Good in-store dining options are something that can’t be delivered online.

Tony Orlando
Guest
9 years 4 months ago

I believe in-store dining will grow in the high-end market areas of the country. It requires a different mindset to make this work, because the restaurant business is different. Many stores already offer fried chicken and take out pizzas, but a dining experience on a higher scale requires true commitment to quality and service to pull it off successfully.

As I’m writing this, my deli staff is preparing a gourmet Christmas luncheon for 26 people, all from scratch. This is a drop off and self serve, but it still is critical to get it perfect, because our catering is driven by repeat business, and word of mouth.

If anyone decides to do this, take your time and create foods so delicious that they’ll always come back for their next business luncheon or party.

Ed Rosenbaum
Guest
9 years 4 months ago

This is all about location. If the supermarket is located in an affluent neighborhood we will see increased demand for in store dining. Conversely, if the store is located in a median or low-income area, the demand will not be there, except for the Costco/Sam’s hot dog and drink.

I do not like the term “dining” for this. To me it is more about eating something quick (not fast food) than dining.

Verlin Youd
Guest
9 years 4 months ago

For supermarkets looking to respond to their customer’s needs and wants, in-store dining will be an important means of value creation and customer engagement.

We’ve been talking for years about how consumers are becoming more time-starved. At the same time, there has been a transformation in the supermarket industry, going from a simple provider of food products, to a multi-service platform that includes deli, floral, banks, dry cleaning, coffee shop, caterer, salad bars, and more.

Strategy 101 would be moving into adjacent markets with high leverage of current distribution and supply chain capabilities — and in-store dining fits the requirements. However, like everything else, execution will be critical — customers do have an expectation of service and value that is a bit different from their expectation of supermarkets today. This will be a challenge for all, and a high value opportunity for some.

Bill Emerson
Guest
Bill Emerson
9 years 4 months ago

In-store dining and — more importantly in my view — meals-to-go, is the next big differentiator for supermarkets, as so brilliantly demonstrated by Danny Wegman. There is a cautionary note. This is a whole different business model. It is more complex (read expensive) than either the grocery or perishable businesses and can cause more harm than good if done in a half-hearted manner.

Cathy Hotka
Guest
9 years 4 months ago

This question dovetails nicely with the report out yesterday that noted that married couples will soon be in the minority. In-store dining is a great option for singles looking for something new and different that won’t break the bank, but will break the monotony of eating alone at home.

Mark Burr
Guest
9 years 4 months ago

Dine-in options can range from a hot dog to a complete gourmet meal. It’s up to the retailer to meet the needs of their own customers and it’s a unique way to differentiate by location as well.

This is the evolution of the meal solutions offer proposition. I expect it to grow among retailers that understand their customers’ needs and are willing to innovate to meet them. It’s not for everyone. It is only for those that understand the changing needs of the consumer and that can innovate and execute successfully to meet them.

The options surrounding this type of offer are limitless.

Anne Howe
Guest
9 years 4 months ago

I think this is indeed about location and convenience, and agree it should not really be called dining. Whole Foods gets it right in my area, while a Kroger store in a very high-end part of town gets virtually no customers in its dining area after lunch. And, from what I’ve noticed, the lunch crowd mainly comes from two private schools that are less than a mile down the road.

Nikki Baird
Guest
Nikki Baird
9 years 4 months ago

I see this as a larger trend across all of retail — the idea that the retailer provides services to go along with products. Thus you have Best Buy and Geek Squad, PetSmart and Petco with grooming services, pet training, even pet hoteling and vet services in some places. REI with their travel business, and now supermarkets with dining options.

However, in this last category, I agree that it must be done well — it can be cafeteria style, as long as it doesn’t feel like a cafeteria. And it can’t be the same kind of food you’d get from any fast food chain, either — done well, it should open diners up to new things, giving the grocer the opportunity to make a little money on the dining experience, but also entice new and different products into the shopping cart the next time around.

Roger Saunders
Guest
9 years 4 months ago
In-store dining experiences have been around for a good number of years in select markets. The Lunds/Byerly’s gourmet stores in Minneapolis have had an outstanding in-store restaurant for 20+ years. This concept is not going to be a big play in supermarkets’ marketing efforts. An eye on the consumer, and the right market location will influence the launch of this strategy. And, proper execution will ultimately make the decision about its success. The consumer is “suffering from time poverty,” as well as a tighter hold on their pocketbook. If the site is right, in-store dining, can play a very positive role in the marketing effort. On an early Friday night in one Kroger Columbus store, I see people enjoying a glass of wine, eating cheese, and holding a conversation at a wine bar. It’s an upscale neighborhood, with a well-stocked liquor department. That does not mean, however, that this concept, or other dining-in experiences will work throughout the chains. As always, retailers need to pay close attention to their customer and consumer-base, surrounding their stores.
Ronnie Perchik
Guest
Ronnie Perchik
9 years 4 months ago
Thinking out of the box for marketers, whether it be a brand or a retailer, is always crucial. What’s a unique tactic to driving consumers through the doors, to visit your store and/or purchase your brand? In-store dining, if the atmosphere of the store is inviting enough, can be an incredibly valuable way to get people to spend time in the store. Whole Foods is a great example. With their identifiable organic foods profile, and store design to suit it, people want to hang out and eat there. While they dine, a product or two catches their eye, and they head over to purchase after the meal. The key is activation, and ensuring that whatever message you want to send with in-store dining, or other types of nontraditional methods, it’s done the right way. One way to make this happen is to look to partner resources, agencies and vendors who specialize in these types of campaigns to assist you. Nontraditional marketing is a risky space, and so I say, trust the experts.
Fabien Tiburce
Guest
Fabien Tiburce
9 years 4 months ago

Makes sense. Dining-in probably drives the prepared-food category which has a higher margin than dry goods. Also, the busier people get, the more likely they are to dine and order in. Lifestyle meets profits.

Jerry Gelsomino
Guest
9 years 4 months ago

Anything that offers ‘convenience’ to shoppers is big!

Mike B
Guest
Mike B
9 years 4 months ago
You need to be flexible with this and any in store dining options will require a significant labor investment. Value perception will ultimately drive the customer’s decision. In SD recently I spent the better part of a Sunday evening visiting the 5-6 Hy-Vee Stores in the city I was in. Hy-Vee has very extensive in-store, ready-to-eat foods with huge seating areas and it was very interesting to see the response from customers. It seemed the dining area in the store near the mall, for example, was by far the busiest of the group. At one point I could not even find a table. They had a variety of options from meal plates, by the pound food, to a “buffet” option. The food was mostly pretty simple, it was fairly good but not knock your socks off good. I tried some carved meats and they were good if not bland. Salad bar was good. Pizza was good. Everything was good and priced appropriately for what it was. Food was served in legitimate plastic containers or on… Read more »
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