Frozen and Refrigerated Buyer – Industry observers say consumers’ appetite for frozen foods will only grow in 2019. Key ingredients include e-commerce, premium private label, meal kits, small formats and targeted promotions.
2018 is shaping up to be a banner year for the frozen department. During the 52 weeks ended Aug. 12, reports Chicago-based market research firm IRI (iriworldwide.com), sales of frozen foods shot up 2.8% to more than $54.95 billion across channels, while volume rose 2.2%, as consumers gravitated to a slew of new offerings in categories like meals, pizza and veggies that better meet their needs.
Comments from Ken Morris:
Ken Morris, principal at BRP, retail consulting firm, tends to agree, calling Walmart “a much bigger threat” to traditional grocers because its stores can act as distribution centers for 90% of Americans who live within 10 miles of one. In addition, “Walmart continues to make it easier for busy consumers to buy online and pick up at the store or at free-standing kiosks or have items delivered to their homes. As these options become accepted and expected, most grocers are going to have to offer these same services to protect their sales — even for frozen and refrigerated items.”
“Consumers continue to spend more of their food dollars at restaurants,” explains Morris. “As more restaurants offer convenient pick-up and delivery options, they’ll pose an additional threat to retailers.” And then there are restaurants like Chick-fil-A that are dipping their toes into the meal kits business as well. In response, says Morris, grocers will likely need to add more prepared food options and continue to blur the lines between super- markets and restaurants.
Morris adds increased supply chain efficiency and technology enhancements to the list of margin enhancers. Topping Morris’ list of technologies (outside of e-commerce) most likely to gain traction in 2019 are those designed to minimize out of stocks by identifying potential problems in real-time so retailers can react before a bad customer moment occurs. Other technologies likely to take hold in the coming year include port- able self-checkout (not quite Amazon Go but a step in that direction), more European-style kiosks, and AI for difficult and/or labor-intensive activities like building ads or setting prices and offers.
Morris says the Amazon Prime program at Whole Foods is a great example of grocery promotion done right. “Promotions exist, but they’re truly invisible,” he says, citing the dawn of the customer-based pricing era. “Pricing used to by chain, then division, then zone, then store, and now it’s moving to the individual customer.”
Read Full Article: What’s on the Menu? (pages 42-48)