THE EVOLUTION OF FOOD RETAIL
Sarah Schmansky & Colleen McClellan
June 2016
WHAT WE WILL COVER:
1.
TODAY’S CHANGING LANDSCAPE
2.
THE POWER OF THE PERIMETER…WITH DELI IN THE DRIVER’S SEAT
3.
OPPORTUNITIES FOR GROWTH BASED ON LOCALIZATION
4.
HEALTHY 3.0 - THE IMPACT ON FUTURE DELI OFFERINGS
5.
A WINNING STRATEGY FOR ALL
HOW SHOPPERS SHOP IS EVOLVING……
SHARE OF CHANNEL SHOPPERS PURCHASING FRESH
THE PAST
Grocery dominant channel
Center store growing and innovating
CONVENIENCE
& GAS
MASS &
SUPERCENTER
WAREHOUSE
& CLUB
GROCERY
84%
88%
99%
Fresh driven by commodity
35%
+6% HH
Fresh Trip growth
+1% HH
Fresh Trip growth
-1% HH
Fresh Trip decline
THE PRESENT
Channel competition high
Center store grow slowing
Fresh changing and innovating
…AS MORE OPTIONS BECOME AVAILABLE
Nielsen Perishables Group: Homescan Total ShopperView Specialty Panel
DISRUPTIONS ARE CHANGING THE WAY WE
BUY FOOD
Source: Company web sites
#1 U.S. consumer concern
after the economy is
health
Half the world thinks they’re overweight
Sales of produce, health and wellness-oriented
categories are growing stronger than center store sales
78 million Boomers hold:
70% of disposable
income, and
account for
50% of CPG sales
In
1970, In 2018,
In
2060,
1 in 5 1 in 3 1 in 2
Americans were
Americans will be
Americans will be
Multicultural
I limit my fast food intake by
having more prepared food.
They taste better, prices are
comparable, and it’s convenient.
-Datassentials Survey Respondent
THE DELI DEPARTMENT IS THE FASTEST GROWING
SECTOR OF THE STORE
Fresh Department Dollar and Volume Growth
DOLLAR GROWTH
VOLUME GROWTH
7%
6%
5%
4%
5%
4%
3%
4%
2%
1%
MEAT
PRODUCE
DELI
BAKERY
SEAFOOD
Source: Nielsen Perishables Group FreshFacts® Total U.S. 52 weeks ending 4/25/2015 vs. Year Ago
Dollar Share of Deli Department
Deli
Beverages,
4%
Deli
Cheese,
17%
Deli Meat,
21%
Deli Other,
0%
Deli
Prepared
Foods,
58%
THE DELI IS A KEY DIFFERENTIATOR IN TOTAL
STORE SUCCESS
$ Share by Fresh Department
8%
DELI SUSHI
9%
30%
5%
8%
4%
8%
5%
7%
5%
8%
4%
8%
4%
6%
32%
34%
31%
31%
29%
34%
Seafood
Bakery
DELI ENTREES
Produce
29%
21%
18%
18%
17%
16%
11%
PROCESSED LUNCH MEAT
Deli
Meat
DELI SANDWICHES
BREAKFAST SAUSAGE
25%
33%
36%
38%
39%
43%
44%
DELI SPECIALTY CHEESE
HAMS
HIGH FRESH VELOCITY RETAILERS
FRESH FIN FISH
PACKAGE MEALS
LOW FRESH VELOCITY RETAILERS
Deli plays an oversized role at best-in-class-fresh retailers and high fresh velocity
equates to total store success
Source: Nielsen Advanced Fresh Perspective Research: Winter 2015
FRANKS
Store that have
high Fresh
velocity…
+10%
+3%
+4%
+1%
-1%
+0%
-6%
$35
Total food $
chg. vs. YAGO
$30
In millions
$25
$20
$15
$10
$5
$0
…also have
high Store
velocity
1
2
HIGH FRESH VELOCITY RETAILERS
3
4
Total food dollars (per store)
5
6
7
LOW FRESH VELOCITY RETAILERS
Total fresh dollars (per store)
50%
30%
Half of total food sales are fresh
at top-performing fresh retailers
Source: Nielsen Advanced Fresh Perspective Research: Winter 2015
INCREMENTAL DELI TRIPS DRIVE STORE DOLLARS
Pre-sliced Meat
Salads
27
31
Service Cheese
33
Prepared Chicken
34
Appetizers/Side/Desserts
42
Snacks
43
Pizza
44
Bulk Meat
51
Dips/Spreads/Toppings
Specialty Cheese
Source: Homescan Total ShopperView Specialty Panel 52 Weeks Ending 3/26/2016
66
73
MOST HHS PURCHASE FROM ALL
AREAS OF THE DELI
DELI HAS THE FLEXIBILITY TO INNOVATE
% of Store Offering Deli Amenities
FRESH LOOKING FOOD
PRE-ORDER KIOSK
Cooking Classes
Music/Entertainment
Cooking Demos
WELL-TRAINED STAFF
Beer/Wine Area
Beer/Wine Tasting
72%
86%
89%
In-store seating
96%
Complimentary Wi-Fi
GRAB-N-GO
50%
57%
61%
FUTURE
Meals from Online
Only Restaurants
Anticipated triple
revenue growth in 2016
New Snack
Packs
24% $ growth for Deli
Snack Packs with Cheese
Source: Nielsen Perishables Group FreshFacts®, The Sophistication of Supermakret – Fresh Prepared Foods – FMI/Technomic 2016
Variety of Gourmet Meals
Prepared at Culinary Kitchens
8% increase in $ sales for Deli
Entrees
AND LEVERAGE PROVEN BRANDS TO WIN
Restaurant brands accounted
for 1.2% of Deli and 2.1% of
Deli Prepared dollars
Dollar Growth
8.9%
8.9%
7.2%
6.1%
Deli
Deli Prepared
Restaurant Brands
Source: Nielsen Perishables Group FreshFacts® Total U.S. 52 weeks ending 4/25/2015 vs. Year Ago
Rest of Deli
Copyright ©2016 The Nielsen Company. Confidential and proprietary.
RETAILER OPPORTUNITIES FOR AT HOME
Innovation & Customization
In-store amenities
Travel/reheating advancements
16
The convenience of picking up
dinner on my way home from
work is more appealing as we
juggle schedules.
-Datassential Survey Respondent
COMMUNITITES IMPACT
PREFERENCES & PURCHASES…
How to leverage the hyper local trend to grow deli
Copyright ©2016 The Nielsen Company. Confidential and proprietary.
national
1980’s
what‘s popular overall
regional
2000’s
census regions or other
major sub-division
hyper local
beyond
true local flavor
19
Copyright ©2016 The Nielsen Company. Confidential and proprietary.
CHICAGO
high indexing foods
Italian Beef
1,670
Mostaccioli
908
Giardiniera
691
20
Copyright ©2016 The Nielsen Company. Confidential and proprietary.
ST. LOUIS
262 miles to Chicago
high indexing foods
Provel
12,406
Toasted Ravioli
11,452
Canneloni
772
21
Copyright ©2016 The Nielsen Company. Confidential and proprietary.
AND the restaurant community
influences deli purchases
22
FOOD COMMUNITIES
what do I sell where
26 distinct area types
U
S
R
urban
suburban
rural
o Reflects the interaction between
people living in the area & the
restaurant environment
o Habits and preferences of
surrounding customers and the
unique set eating establishments
that flourish by responding to
those preferences.
R
Fast Food Rural Hubs
Rest Stop Americana
Sushi sales
Fast Food Rural Hubs
12 to 1 ratio of deli
chicken to sushi sales
Deli chicken sales
U
HIP STOREFRONTS & HOT SPOTS
‘Coffee shops, cafes, and small eateries’
Hip Store Fronts and Hot Spots
Sushi sales
2 to 1 ratio of deli chicken sales to sushi
Deli chicken sales
Copyright ©2016 The Nielsen Company. Confidential and proprietary.
1-approach doesn’t fit all
units may need to localize
29
TOP CHICKEN TRENDS
Chicken at Breakfast
(waffles, biscuits, maple syrup, energy bowls)
Elevated Breading
(panko, tempura, pecan, hand
battered/breaded)
Mediterranean Chicken
(shawarma, gyro, tzatziki/yogurt sauce,
skewers)
Pulled Chicken
(healthy alternative, BBQ, Mexican, Asian
dishes)
COUNTRY BASICS
Elevated Breading
‘A little bit of everything, not a lot of
anything’
Add an upscale edge
options are few but balanced
variety of traditional, mid-priced
American cuisine.
Hand Breaded
Hand Battered
Panko
+26%
+15%
+52%
Note: All growth rates are 4-year percentage changes (2015 vs. 2011).
Mediterranean Chicken
URBAN ORDINARY
ethnic yet healthy appeal
‘Urban desert’
lowest density of dining locations
higher presence of ethnic restaurants….
Mediterranean, Caribbean, Indian, South American
Tzatziki
Shawarma
Gyro
+38%
+37%
+13%
Note: All growth rates are 4-year percentage changes on chicken menus (2015 vs. 2011).
URBAN ORDINARY +
COUNTRY BASICS
BBQ
Pulled Chicken
Pulled (or shredded) chicken can give
either an ethnic or Southern flair to menu
items.
Asian
Mexican
THE “NEW HEALTHY”
POTENTIAL RISKS TO DELI SALES
“
I am trying to eat healthier. A lot of
the prepared foods are high calorie
and high fat. There is also no
nutritional information for most of
the foods.
-Datassential Survey Respondent
Copyright ©2016 The Nielsen Company. Confidential and proprietary.
HEALTHY 1.0
HEALTHY 2.0
HEALTHY 3.0
WEIGHT MANAGEMENT
FEEL GOOD
FUNCTIONAL
1980’s to early 2000’s
early 2000’s and beyond
early 2010’s and beyond
Low-fat
Low-calorie
Low-carb
Local
Natural
Organic
Protein
Antioxidants
Superfoods
36
Copyright ©2016 The Nielsen Company. Confidential and proprietary.
PULSES:
crops harvested for their dry seed
lentils
chickpeas
pinto beans
kidney beans
black-eyed peas
fava beans
protein
fiber
vitamins
amino acids
37
Copyright ©2016 The Nielsen Company. Confidential and proprietary.
LENTILS
+69% menu growth over past decade
versatile – soups, salads, sides, and more
potential meat substitute
38
Copyright ©2016 The Nielsen Company. Confidential and proprietary.
CHICKPEAS
+290% menu growth over past decade
also a potential meat substitute
salads, falafel, hummus, and more
39
Consumers state they MOST want healthy options from the following categories:
Meat & Poultry
Deli
Snack
Bread
Bakery
Datassential, New Healthy Keynote 2016, N=1006
When consumers were asked how GROCERY STORES could improve PREPARED FOODS……
Hot and cold prepared foods should have nutritional and ingredient labels
66%
Prepared foods sections should make foods from scratch as much as possible
65%
Best way to present healthy products is to highlight them with healthy labeling
63%
Cold salads and bars should have a both green and grain salad offerings
62%
Hot prepared sections should offer more vegetable-based/vegetarian options
55%
Datassential, New Healthy Keynote 2016 N=1370
How to motivate purchases of prepared foods
1. Comfort-food favorites are a launchpad for healthier graband-go.
2. Food with a story – highlighting scratch style preparations
such as: “House Made, Scratch, Hand-Breaded etc.
3. Nutritional information may draw attention to prepared
foods section.
Q: which of the following do you agree STRONGLY regarding the PREPARED FOODS SECTIONS…?
Datassential, New Healthy Keynote Report 2016 N=1370
Copyright ©2016 The Nielsen Company. Confidential and proprietary.
KEY
GAPS
How restaurants are
responding vs. demands
Operator
Consumer
Gap
Antibiotic-free / hormone-free
19%
43%
<<24%>>
Sourcing indicated
18%
38%
<<20%>>
High protein menu items
13%
32%
<<19%>>
Smaller portions of higher quality meats
15%
33%
<<18%>>
Meats blended with plant-based ingredients
13%
30%
<<17%>>
More informative menu descriptions
12%
29%
<<17%>>
World Cuisine Dishes
21%
28%
<<7%>>
43
WELL RECEIVED
CHANGES
LEAST SUCCESSFUL
More World Cuisine
86%
More high protein items
83%
Higher-quality meats
78%
High-impact preps on produce
78%
Less expensive cuts of meat
77%
Antibiotic free
75%
Blending plant & animal proteins
75%
Add / replace meat with non-meat
50%
Reducing overall menu size
49%
Reducing portion of animal protein
45%
Brick Oven Roasted Chicken
Unbranded PI
99
Uniqueness
32
Bertucci’s
Half chicken marinated with lemon, fresh sage and garlic for 24 hours then
baked to juicy perfection in our 650 degree brick oven. Served with….
Mediterranean Chicken Burger
Branded PI
85
Uniqueness
49
Back Yard Burgers
A delicious blend of all-natural chicken blended with spinach, mozzarella, quinoa
and peppers flame grilled and served on 5-grain flatbread with crumbled feta
cheese.
CAMPFIRE
CHICKEN
Enjoy camp-style cooking over an open fire with
a half chicken seasoned with Cracker Barrel®
Campfire spice blend and slow roasted 'til tender with
fresh carrots, corn on the cob, red skin potatoes,
chopped onion, and tomato wedges. We cook and
serve it in foil to seal in all the savory juices.
Purchase Intent
Liking
Uniqueness
Draw
100
99
98
100
WHAT DOES THIS ALL MEAN?
THERE IS A WINNING STRATEGY FOR ALL!
Strengthen
Basics
Build
Innovate
1. Emphasize convenient, portable, on-the-go complete meals & snacks
2. Communicate about the Deli – cross promote & draw them in
3. Connect with your consumer through ‘Food with a Story’
1. Leverage restaurant brands to build perception.
2. Cater to different meal occasions via variety of products
3. Compete with on-trend foods and add local preferences
1. Elevate your deli to a dining destination .
2. Be transparent to win the health-conscious consumer
3. Consider technology as vehicle for promotion
THANK YOU!
Sarah Schmansky, Director
[email protected]
Colleen McClellan, Director
[email protected]