Consumers altering channel decisions for ready-to-eat meals

Posted by Daniel Palmer on 16th December 2008

A new report, which analyses how retailers are currently satisfying consumers’ needs for ready-to-eat foods, has discovered that retail stores (supermarkets, grocers, gourmet food stores) have taken a greater share of ready-to-eat meal and snack purchases in America. The fast food or quick service restaurant (QSR) segment and the full service restaurant categories have been put under greater pressure. In the US, QSR’s realised a 1 per cent increase in sales to August, while retail stores gained two per cent and full service restaurants had a slight decline.

According to the Retail Meal Solutions report from The NPD Group, a leading market research company, foodservice meals and snacks are still primarily the domain of restaurants, but retail stores (6%) and convenience stores (7%) now have a greater share.

“Consumers’ increasing use of foodservice for ready-made meals has long been recognised by grocery retailers as an opportunity,” Bonnie Riggs, NPD restaurant industry analyst and author of the Retail Meal Solutions report, said. “For some time, retail stores have offered prepared foods in the deli department, but have now expanded foodservice offerings to include a variety of cold and hot ready-to-consume meals and snacks.”

The report found that consumers were more likely to frequent certain retail channels at different times of the day. “Retail outlets are more dependent on morning meals and PM Snack purchases than QSR,” Ms Riggs advised. “These are the on-the-go needs that are being met by retailers – consumers making those purchases on the way to work, to eat at work, or in their car. Purchases that otherwise would have been made at a QSR.”

Consumer motivation in purchasing prepared meals and snacks from retail stores include convenience, availability of healthier options, variety, and affordability, according to the report. Ms Riggs points out that these are attributes consumers report lacking at QSRs.

“As always, it’s a matter of learning and understanding consumers’ needs when it comes to meal and snack solutions,” she said. “With this learning and understanding, there is opportunity here for retailers, foodservice manufacturers, and restaurant operators.”