Prepared foods is one of the most complex sections of the supermarket.
And not just for the widely assumed reasons.
True, it’s a monumental challenge to produce and distribute the wide range of items some retailers offer while facing hurdles ranging from shrink to food safety.
However, increasingly trumping production challenges are decisions on what items to produce, calculations that are getting more complex as they tie into demographics and dayparts.
According to the latest forecast report from The NPD Group, consumers aged 35 years and older are more likely than younger shoppers to purchase prepared foods for dinner, while those 18 to 24 years old choose prepared foods for snacks. Those 65 years and older, meanwhile, eye these foods for lunch.
Changing consumer behavior and smart merchandising decisions have enabled food retailers to advance their prepared food businesses in recent years, and NPD forecasts a robust 10% growth over the next decade, compared to only a 4% increase in restaurant traffic.
Restaurants are on the defensive as they strive to figure out formulas to capture more share in this segment.
How can retailers stay on top of this trend? Partly by emphasizing the attributes that led to gains in the first place: value, fresh ingredients and quality food, according to an interview I conducted with Bonnie Riggs, NPD restaurant industry analyst.
But there’s more. Retailers need to do a better job marketing their offerings, and would benefit from greater variety, Riggs said. That variety could be about more cuisines, but also about a bigger range of portion sizes, which retailers have more control over than restaurants, Riggs added.
Which retailers are doing particularly well in the variety department? Riggs cited Whole Foods, Meijer and Mariano’s as three to watch. She said there’s a lot of opportunity, especially in major metro areas, for variety that goes beyond basic fare, supported by a range of in-store food stations.
Retailers could also benefit from more consumer insights. For example, SN recently reported from the Fancy Food Show in New York about a preference among younger Millennials for globally inspired foods that are portable and nutrient dense. That’s the kind of information that could spark assortment additions for some retailers.
Supermarkets and other food retailers have opportunities for faster growth in prepared foods, but it will take analysis using a 3D approach: demographics, dayparts and data.
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