Grocery and C-Stores Adapt in the Face of Evolving Consumer Values
05.18.2016 by Laura Bayard, Industry Analyst
Consumers have traditionally purchased food based on three values: taste, convenience, and price. According to a report from Deloitte Consulting, new values are coming into play and are changing the dynamics of the food industry. While traditional values are still the main drivers, consumers are becoming increasingly concerned with the overall transparency regarding the origins and processing of their food. This transparency encompasses specific values consumers are interested in, which include health and wellness, safety, social impact, and experience. As these values become more of a disruption, retailers and food service providers are becoming forced to innovate current offerings and strategies—grocery and convenience stores included.
Today’s grocery and convenience stores are now in competition with other food service providers when it comes to serving dine-in and takeout meals. AlixPartners’ 2016 Restaurant Outlook reveals that 36 percent of consumers’ primary purpose for visiting a c-store in 2015 was to purchase a meal, up from the previous year’s 33 percent. Similarly, 28 percent of consumers’ primary purpose for visiting a grocery store was to purchase a meal, which increased from 23 percent the previous year. However, when consumers anticipated where they will dine out in 2016, grocery stores could see a near nine percent drop in meal sales, while fast casual and fine dining could see an 18 and 14 percent increase respectively. There’s clearly a pattern of customers seeking to consume meals outside the home, and both traditional and non-traditional food providers are positioning for the increased spend and meal share.
Grocery Stores Become More Strategic
The shift in consumer values has encouraged grocery stores to become more strategic in their food service and prepared food offerings. As prepared foods represent roughly five percent of grocery store sales, some grocery retailers are shifting towards a “grocerant” approach, which features elements of a restaurant within a grocery store. Many grocerants have installed seating areas and offer self serve and made-to-order meal items. Grocerants are winning over today’s consumers with a wide variety of fresh, locally sourced ingredients not served by traditional grocery stores. Many grocery stores see this trend as a necessity to attracting consumers looking for new venues for their meals. It’s projected that grocerants will grow at a rate of eight to nine percent through 2017.
Grocery and C-Store Bite into QSR Sales
As evolving consumer dining patterns and declining gas and cigarette sales push grocery and convenience stores to focus on food service innovation, QSR sales could take a serious hit. According to AlixPartner’s 2016 Restaurant Outlook, prepared food buys per customer are an average of six times higher than QSR visits per customer. While QSRs have led in marketing power, more Americans are living (and eating) alone and are blending restaurant, c-store, and grocery store purchases to “multi-channel” their meal purchases. Grocery and convenience stores also have the advantage of upselling customers who are already in their store for another reason (purchasing fuel, grocery shopping, etc.).
Capitalizing on Consumer Values
Evolving consumer values will continue to disrupt the retail food service industry. This gives grocery and convenience stores an opportunity to innovate food service offerings to drive meal purchases and capitalize on consumer preferences. Doing so will allow retailers to maintain relevancy in the growing and dynamic food service world.