"Grocerants" & Calcified Thinking

An article about the rise of the "grocerant" by Steven Johnson got me to thinking.

A grocerant is a grocery retailer offering ready-to-eat foods. Some are chilled and you take home to heat up (who hasn't had one of those roasted chickens loaded with salt?). Some of the upscale grocers like A&P and Wegmans have cafes and places where you can eat a meal while you shop.

Steve's point is how restaurants are hurting (especially the fine dining and casual dining categories). Only the Quick Serve Restaurant (QSR) operators are profitable, mostly because consumers still want to eat out, but have "traded down" to fast food. Their strategies for surviving the Great Recession mostly center on deep discounting and so-called "value meals." Some of them are menu peripherals, while other operators are dropping the prices on core menu items. Cutting prices usually brings in customers, but kills your bottom line, since in many cases, those customers don't come back for full-price fare. Yet the industry seems to be fresh out of fresh ideas.

It's surprising how insular most industries are. Looking at GM now, the village idiot can claim with reason to have seen all this coming. Why did GM management fail to invest the huge profits they made from SUVs and trucks into "the next big thing" - or at least finding out what that might be? Did they really think gas would be less than $1 a gallon forever? It was only a decade ago the Japanese first put their muscle behind taking market share of the light truck segment. Did GM and Ford think they were bulletproof?

Of course, we run into myopia on a regular basis. For example, some restaurant execs we talk with can't see the difference between an in-home meal solution and eating out. For them, it's all just eating. Therefore they balk at licensing their restaurant's brands and products to retail because they think that would literally take money out of their pockets - or their franchisees' pockets, which can be more worrisome, since franchisees have lawyers and (like with Quiznos) aren't unwilling to sue the parent company.

Consumers, however, see a multitude of eating opportunities these days, without borders or boundaries. Snacking is now a meal solution, especially for the young, and no longer a bridge to the "real" meal. So it's not surprising that shoppers would warm to the notion of eating in a grocery store.

The key here, though, is whether the grocery execs can see above their own cubicles. Consumers will go right back to restaurants if their expectations aren't met and the deliverables in the equation decline or get stale. Health and safety are going to make a difference, too. If we get a snootful of salmonella or lysteria in a grocerant meal, then the whole equation could change. With a majority of fresh foods being prepared off-site, this is a real risk.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)