The era of instant gratification is intensifying with shoppers expecting free and fast delivery, the ability to binge-watch all the episodes of their favorite shows in one sitting, and almost half of TikTok users finding videos longer than a minute “stressful”!
That trend is extending to mealtimes where Americans are demanding fast meal solutions leading to the rise of prepackaged meals in grocery stores.
“With schedules zooming around like crazy, families continue to take advantage of pre-made meals sold at grocery stores. The trend is not losing any gas, and grocery stores are capitalizing,” reported Supermarket News in June.
The 2023 Supermarket News Fresh Food Trends Survey found that 65 percent of respondents will increase their assortment of prepared foods -- while almost half will commit more space to prepared foods -- over the next year to meet this prepackaged meal demand.
Grocery Stores Prepared Food Take a Bite Out of Restaurants
The loser in this equation may very well be restaurants.
“They say never go grocery shopping when you’re hungry. Well, customers are now satisfying their hunger in grocery stores as restaurants leave them feeling out-of-pocket,” writes Bagrat Safaryan, CEO of Local Express, in Forbes in June.
The Revenue Management Solutions “Consumer Insights Report” taken last fall found that everyday home cooking jumped from 59 percent to 72 percent from the first to third quarter last year.
The report also found that:
- Nearly 40 percent of respondents believe restaurants do not provide good value because:
o 68 percent reported high prices.
o 15 percent complained about portion size relative to price.
o 11 percent mentioned value relative to cooking at home.
o 9 percent mentioned poor service from staff.
o 8 percent mentioned the economy (gas prices, inflation).
“Wanting more for their money is just one reason 2023 is seeing a continued shift from restaurants to store dining, but what else is making grocers the more attractive option?” asked Safaryan. “Not having to cook is 40 percent of restaurant-goers' reason for opting to eat out, according to Food Industry Association’s (FMI) 2022 report. As retailers look to capitalize on consumers’ demand for convenience and value for money, stores are increasing variety with individual and family-sized prepared food options.”
Perimeter Power: Fresh Sales Drive Supermarkets
The 2023 Supermarket News Fresh Food Trends Survey found that fresh sales continue to be a driver for most supermarkets as consumers stick to the perimeter.
When asked about the goals for the fresh-food program over the next 12 months, respondents said:
- Improve labor productivity and retention: 44 percent.
- Reduce food waste: 42 percent.
- Reduce shrink: 36 percent.
- Reducing stock-outs: 28 percent.
- Improve freshness: 26 percent.
- Supporting online order and fulfillment: 18 percent.
- Supporting on-site production planning: 14 percent.
- Reducing systemwide inventory on hand/increasing turns: 14 percent.
- Decreasing/rationalizing assortment: 11 percent.
“Fresh sales continue to be a driver for most supermarkets, with 60 percent of survey respondents saying perimeter sales increased over the last 12 months (just 22 percent said they remained the same vs. 2022.),” said Supermarket News.
Consumer Shift towards Fresh, Less-Processed Food Items
Respondents to the survey found that the biggest factors behind the shift in sales in the coming year would be:
- Continued shift in consumer taste for fresh, less-processed food items.
- Focus on smarter purchasing and adjusting retail to be more competitive.
- Consumers are beginning to spend more as they become comfortable with the current market trends.
Prepackaged or prepared food items check a lot of consumer needs boxes.
“Guests feel safer shopping for ready meals and lunch items out of our deli, market, produce, bakery, and butcher block, rather than spending high prices at fast-food locations and restaurants. I feel guests have learned to shop at grocery stores more than eating out, and since the pandemic have learned to cook at home and eat together as a family,” one retailer told Supermarket News.
Safaryan says the proof in the – lunch counter.
“The International Dairy Deli Bakery Association (IDDBA) year-end report found that deli-prepared foods, such as prepared meats, salads, and sandwiches, were up 11.9 percent in sales. Lunchtime favorites, including soup and chili, shot up even further, gaining 21.1 percent additional sales,” said Safaryan. “This trend will likely continue as companies reinstate return-to-office policies and customers look for a quick bite on their lunch break.”
What’s Ahead for Prepared Food at Grocery Stores
What can consumers expect to see in terms of prepared food at their local grocery store in the months to come?
Respondents to the 2023 Supermarket News Fresh Food Trends Survey said they grow their prepared foods assortment in the following directions:
- Produce: 50 percent.
- Deli: 45 percent.
- Bakery: 40 percent.
- Meat/seafood: 37 percent.
- Cheese: 33 percent.
- Floral: 29 percent.
In terms of perimeter space, 48 percent of respondents said they increased the amount devoted to prepared foods in 2022. When asked what their customers likely valued most when shopping along the perimeter, the respondents said:
- Quality and freshness: 38 percent.
- Cost: 22 percent.
- Convenience: 15 percent.
Online Ordering and Mobile Apps Gain Momentum
Grocery stores are utilizing technology that takes advantage of data to push prepared food via online ordering and mobile apps.
“Mobile apps are a great way to gather customers' preferences and understand what prepared meals they would like,” said Safaryan. “Alternatively, in-store customers can order ahead for "pickup-to-go" via apps or kiosks as they shop, while bringing people to the store means they can buy last-minute items as their meals are freshly prepared.”
Supermarket News found that nearly half (48 percent) of grocers offer online ordering and curbside pickup with 37 percent fulfilling their orders with third parties like DoorDash, while 23 percent manage their own online ordering and delivery services.
This agility allows grocery stores prepared food and beverage offerings ability to compete with fast-casual restaurants, quick-service restaurants, club stores, and cooking at home.
How will grocery stores grab a bigger share of the prepared food market? Respondents to the survey said:
- Promotions and specials: 50 percent.
- Grab-and-go offerings: 46 percent.
- Loyalty or frequent buyer promotions: 36 percent.
- More space for prepared food and beverages: 28 percent.
- Cleaner ingredient lists: 26 percent.
- Specialty selections like gluten-free and organic: 21 percent.
- Globally inspired recipes: 21 percent.
- Click-and-collect, order ahead capabilities: 20 percent.
“Overall, the fresh perimeter area for grocers continues to produce solid sales, and managers are capitalizing on the trend of grab-and-go meals,” concluded Supermarket News.