Food retailers seeking to jump on the prepared foods trend with compelling in-store destination centers can mitigate risk through better understanding the business potential of prepared foods. But they also need to understand the human side of why prepared foods are selling so well, said Hillphoenix Marketing & Design Specialist Margie Proctor. “Know the industry research, but put yourself in the shoes of the shopper, too,” she advised.
Proctor has recently been advising several grocers and convenience store owners about how to create in-store destination centers for prepared foods. These spaces are designed to delight and surprise shoppers — and encourage them to spend more.
There’s no doubt that destination centers and the prepared foods they offer are hot. Industry research firm Technomic reports that 43% of supermarkets manage a separate prepared-foods unit on their books. These aren’t all destination centers, of course, but many are — and many existing prepared-foods areas are getting destination center-style upgrades. What’s more, while fewer than 1 in 10 supermarkets reported total store sales growth of more than 5% in 2014, 69% reported that same level of growth or higher in their prepared-foods department. Those numbers are based on Technomic’s recent survey of Food Marketing Institute members. FMI’s own data shows prepared-foods sales hit $10.8 billion in 2015, up almost 10% from the previous year.
So, that covers the business potential. The next question, Proctor said, is why this is happening. “The why — that’s the biggest question food retailers need to be asking themselves if they want to take a strategic, lower-risk approach to prepared-foods destination centers,” she said. If grocers understand the consumer need behind booming prepared-foods sales, they can assess whether it’s a fad or a real shift in how shoppers buy food.
Proctor points to some statistics. In about 60% of the 34.4 million U.S. families with children, both parents work, according to the federal Bureau of Labor Statistics. Single parents struggle even more to do it all. The mother works in 69% of single-parent households headed by women; the father works in 82% of single-parent households headed by men.
“Those parents are busy. But they understand that when everyone comes together at the table, it creates high-quality family time,” Proctor said. “They know regular, nutritious meals can keep themselves and their children healthier and help combat issues like childhood obesity. They care about health and the wholesomeness of the foods they eat and don’t want to give their kids fast food every night. They want to create memorable meals, but they’re simply overwhelmed.”
Indeed, the biggest factor keeping nearly half of U.S. families from cooking a meal together is their busy schedules, according to a survey conducted for the National Association of Convenience Stores. About a third of survey respondents said they’re just too tired to cook after a long day.
Food retailers can help. Supermarket destination centers featuring prepared foods give families quick, healthy mealtime options. A well-designed layout, atmospheric lighting and strong merchandising add to the allure and boost the perceived value of prepared foods and other products offered within a destination center, Proctor said. “Destination centers make shopping after work feel more like an ‘experience’ than a chore. That’s important to busy parents with stressful lives.”
The demographic and economic trends behind shoppers’ interest in destination centers and the prepared foods they sell are real and aren’t going away, Proctor noted. “That understanding gives food retailers the confidence they need to follow the destination center trend. It’s an investment that’s a safe bet for future returns.”