The Rise of the Grocerant

One of the smartest guys on the 'Net is Steve Johnson whose blog is called "The Grocerant."

You can visit it here.

Grocerants are hybrid grocery stores and restaurants. After all, grocery stores and supermarkets have changed a lot since the jump by Wal-Mart into the category. And now the Recession is powering the move towards the "grocerant." Oh, food retailers have always had their roasted chickens and fresh salad bars, but now they're offering sushi, Asian noodles (not really Chinese or Thai per se), hot & cold appetizers and more. Take-home meals have been commonplace with grocers, but increasingly they're replacing "take out" with "eat in" for some upscale retailers. Barnes & Noble-style cafes are no longer the rarity.

Grocers are seeing 7-10% growth in sales of prepared items, largely at the expense of restaurants. In the past, grocery stores had been losing out steadily to restaurants, with 48.5% of total food expenditures in 2008 spent away from home. Now things have shifted, with the National Restaurant Assoc. estimating restaurant sales will be off 1% in 2009 (conservative if you ask me).

In order to attract the restaurant customer, Albertsons has pegged their in-store prepared foods to the slogan “Simply Good Meals,” grouping foods together for easy menu combos and placed in the “4:15” sections in line with the time busy shoppers are looking to put together dinner.

Southern California chain Stater Bros. is adding two kinds of meatloaf for those wanting “comfort food,” but also offers carnitas and chicken teriyaki.

With trips to the supermarket steadily declining, the challenge for retailers is to keep value and not resort solely to price cuts. Chains like Stater Bros. and Albertsons have slashed prices 20% on many items, and have reported lowered earnings as a result, though some chains like Kroger report profits up. The leader in providing prepared meal innovations is Tesco-owned Fresh & Easy who features a line of meals intended to feed a family of four costing just $8. While the category can be popular and lucrative, retailers are sometimes unsure how to capitalize. Consumers think the foods are prepared on-premises (they aren’t), and some shoppers resist paying premium prices for no-name or store-branded prepared foods, so moving beyond five varieties of egg or potato salad can be a strain on supermarket supply lines.

Finally, attracting good food prep talent to work in a supermarket has been an uphill battle.

But expect more market share and "share of stomach" to go to the grocerants.

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