Prepared Foods Top Strategic Imperative for Supermarkets

Rotisserie chicken may have started the trend, and Whole Foods may get credit for raising prepared foods to a new level, but these days food retailers of every ilk are finding ways to ramp up their retailer meal solutions (RMS) programs. RMS has emerged as a critical strategic initiative for not only most supermarket chains and supercenters but also for convenience stores, dollar stores, and drug stores.

Shifting consumer dynamics are one reason RMS continues to grow. “Gone are the days of trips to the grocery store designed to address a family’s needs for the next one to two weeks,” explains Wade Hanson, Technomic principal and director of the firm’s retailer meal solutions practice. “Instead, consumers shop more often and use many different types of stores with an eye toward fresh foods and ready-to-eat meals.”

For most food retailers, prepared foods at the store perimeter present a critical way to differentiate their offerings from the myriad of competitors. “Since the center of stores have changed very little in look and function over the years, retailers must concentrate on the perimeter to set themselves apart with consumers,” explains Hanson. Suppliers can play an important role in helping retailers develop products and deal with related issues like supply chain, waste and consumer understanding.

To help suppliers and retailers tackle these and other challenges, Technomic recently completed a new study on the RMS segment. Retailer Meal Solutions: Capitalizing on the Next Generation updates Technomic’s prior RMS research and provides new five-year forecasts, projected growth rates and insights into the needs of consumers and retailers alike. Interesting findings from the research:

  • Over the past five years, supermarket prepared foods have grown more than 6 percent annually.
  • Mass merchandisers/supercenters have experienced annual prepared foods growth exceeding 13 percent over same time period.
  • While food margins are often slim, retailers have seen prepared foods margins strengthen and now view RMS as a profit center rather than a traffic driver. This development is fueling changes in store layout, labor utilization, merchandising, preparation practices and prepared foods menus.
  • As the economy improves and consumers return to restaurants, retailers will need to continue raising the bar on their RMS offerings, particularly in terms of value and convenience.
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