COMMENT
April 21, 2017 Retail Week 25
The major supermarkets have noted the
appearance of tech-enabled food services such
as Hello Fresh, but they have bigger problems
on their plates, writes Fran Minogue
The way we eat now isn’t
worrying the big four
Did you grab a coffee and
muffin on the way to
work this morning? Do
you often pop out to Pret,
Eat or Leon at lunchtime? At the end
of a long day, do you give in and let the
kids order Dominos, or go online to
Just Eat or Deliveroo?
If so, welcome to the way we eat now.
This pattern of behaviour may be
London-biased or more typical of
millennials than families, but it’s an
increasing trend and one that is gradually eroding frequency of visit and
basket size for the mainstream grocery
players, particularly in larger stores.
Subscription models are taking
hold too. Hello Fresh and Gousto are
gaining traction.
The latter is now delivering 100,000
recipe boxes to UK households per
week, and the latest food and drink
report predicted that gourmet meal
kits will be a key trend over the next
12 months.
So, how are the supermarkets
responding?
Ocado is ahead of the game in that it
has always featured recipe ideas and is
now going further with a tech-enabled
meal planning service.
Customers can create their own lists,
save recipes, and an algorithm will
suggest items based on known preferences, such as gluten-free or organic.
Fancy making spag bol tonight? Click
on the product button under the recipe
and everything you need will be
delivered to your door. Tesco is doing
this too with its Real Food website.
The big four are reacting to the new
market disruptors, and Tesco and
Waitrose are currently trialling recipe
boxes. A source at Tesco commented
that time-strapped customers are
looking for solutions not products, but
still enjoy cooking for the family.
A recipe box can be picked up on the
way home – no need to plan or book
deliveries in advance – and is cheaper
and healthier than a chilled ready
meal too.
One chief executive believes that
Hello Fresh and Gousto will find it hard
to sustain their margins without scale
as the meal box concept becomes
more mainstream.
Hello Fresh’s revenues have grown
significantly, but profits continue to be
elusive and it has been suggested that
customers buy into initial offers but fail
to sustain the habit once faced with
regular prices and delivery charges.
In an attempt to leapfrog rivals, Hello
Fresh has set up a joint venture with
Sainsbury’s called HF Go and, as such,
is following Graze into mainstream
supermarket distribution.
Morrisons also appears unperturbed
by the rise of new entrants and is
focused on developing its partnerships
with Ocado and Amazon.
Its foray into standalone convenience
wasn’t successful, but a recent tie-up
with Rontec to supply garage forecourts
is going well and has the advantage of
being capital-light.
Greater investment in food to go areas
is also paying off.
So, overall, the major grocers aren’t
worried about the tech-enabled new
kids on the block. Time will tell if
they’re right, but as one said:
“Right now, I’m far more
worried about Aldi!”
Fran Minogue is managing
partner at Clarity