It's official: grocers are honing in on traditional restaurant turf in a major way. Whether it’s a full home meal replacement (HMR) or components to add to a home-cooked meal, grocers are proving they can offer innovative and high-quality “ready-to-heat or ready-to-eat” options to draw more and more customers every year.
According to the 2017 Canadian Retailer Meal Solutions Consumer Trend Report from research firm Technomic, nearly four in five consumers now purchase meal solutions from retailers (including grocery stores) at least once a month, and more than a third do so weekly. The latest figures from Nielsen show HMR sales have increased 25% since 2012 and today, the Canadian HMR market is worth about $880 million.
“Generally, we know retailers are fighting not only for the consumer share of the wallet, but also the share of stomach,” says Carman Allison, Nielsen’s vice-president of consumer insights for North America. Not only are retailers expanding HMR offerings beyond traditional rotisserie chicken and pizza, he says, but they’re experimenting with options that help consumers customize their orders on demand.
WHO’S DOING IT RIGHT?
Take Freson Brothers in Alberta, where shoppers can choose from a combo-driven menu featuring a choice of hot sides (mac & cheese, mashed potatoes, barbecue baked beans etc.) and protein such as crispy chicken, Alberta beef or pork slow roasted in the smoker. Bakery and deli director Jay Cummings says the customized omelette station introduced in the Fresh Market more than a year ago has been another big draw. “It’s a great option for weekend brunch,” he says, adding that about 30% of Freson customers are coming for prepared meal solutions.
According to Nielsen, chicken still dominates the prepared food market at 53% of dollar sales, but other offerings such as cooked ribs, pasta dishes, salads and sushi are also gaining favour.
In addition to made-to-order sandwiches, chicken and pizza, a daily changing menu of hot items at Toronto-area chain Longo’s provides everything from Chicken Cordon Bleu to cauliflower alfredo to fig and fennel salad. “When I began my career, Caesar salad was a breakthrough but now there are a host of people willing to try new foods,” says Gary Wildman, the food service director at Longo’s. “The benefit of carrying a large assortment means customers can be adventurous with little risk because they can try something like a spicy chicken meal for $6.”
At Stong’s Market in Vancouver, hot meal options change consistently, offering ethnic flavours and gluten-free options from time to time. “We try to keep a balanced menu by offering some static items that customers are used to coming back for like stone-oven pizza, paninis and soup, but also some new things for them to try,” says marketing manager John Roden.
The classics like chicken and pizza still hold strong at Metro, thanks to ongoing innovation, says André Gagné, vice-president of fresh merchandising. In its renovated stores, the company has introduced a spit-roasted chicken cooked in a gas-fired rotisserie oven and a more upscale hand-drawn oval pizza called the Artisan. Four times a year, the grocer offers “Flavours of the Season,” with new pizzas, sandwiches and chicken. “Right now, we are in a Canada 150 theme with Montreal smoked meat wraps, bacon pizza and maple-infused barbecue chicken,” says Gagné. “Our restaurant-quality food does appeal to time-starved people and we also offer great value versus quick-service restaurants.”
In addition to the sheer convenience of being able to buy your dinner while you grocery shop, HMR is gaining market share because it is less expensive than a restaurant meal and less time-consuming, says Maia Chang, senior research analyst, consumer insights at Technomic.
Millennials with young children are driving the growth primarily, says Chang, but urban dwellers of all ages are turning to HMR more often as well. “In cities, it’s more convenient to pop over to a grocery store to pick up a meal, so there has to be variety,” she says, adding that consumers are starting to look for more ethnic options, especially Brazilian, Japanese, Korean and Vietnamese flavours.
Some grocers like Bruno’s Fine Foods in Toronto, are finding their HMR appeals to other demographics as well. “About 20 to 30% of our customers are seniors so we always provide individual servings,” says Al McMurray, store manager. “We’re also focused on all-natural products and have built a reputation for providing options customers know will be free of preservatives.”
WHERE DO WE GO FROM HERE?
But even with continued growth, some analysts believe grocers have just scratched the surface of where HMR is going. “I think this category is underdeveloped and there is a lot more growth potential,” says Robert Carter, executive director, foodservice at NPD Canada. For one, he expects there will be an expansion of HMR—now geared to dinner options—to include more breakfast and beverage programs. “Some are doing it now with pop or juice displays nearby, but they really haven’t tapped into what the true bundling opportunity would look like,” he says. “With the option of beer or wine available , there really is the opportunity to drive up the spend and offer a restaurant-like meal solution.”
Given that millennials are still the biggest demographic going to restaurants, Carter says there are better ways to lure this tech-savvy segment of the population. “HMR is so far behind in terms of technology,” he says. “Even something as simple as tying into a food delivery service like UberEats or having an app where a customer could choose from different customized meals for pickup would be huge.”
Chang agrees, noting some innovations happening in the United States already with 7-Eleven testing meal delivery options. As retailers continue to improve their HMR offerings, she says this section of the store will be a visit driver in and of itself, so grocers should consider moving these departments to the front of the store if they haven’t done so already.
“I think many grocers are still in the mindset of ‘let’s see what sells,’ ” says Carter. “There are so many meal occasions to cater to and once grocers truly market to that we will really see this category take off.”
This article appeared in the June issue of Canadian Grocer.