Supermarkets are Moving in on This $100B Industry

The grocery industry has long been a staple in the United States economy. It is a $100 billion industry that has traditionally been dominated by large supermarkets, such as Walmart, Kroger, and Safeway. However, in recent years, a new trend has emerged: supermarkets are moving in on the $100 billion industry of meal delivery and meal kit services.

The meal delivery and meal kit industry has grown exponentially over the last decade, with companies such as Blue Apron, HelloFresh, and Freshly leading the way. These companies provide customers with pre-measured ingredients and step-by-step instructions to cook meals at home. Meal delivery services, on the other hand, offer fully-cooked meals that are delivered to customers' doorsteps.

The emergence of meal delivery and meal kit services has disrupted the traditional grocery industry by offering customers a more convenient way to cook and eat meals. As a result, supermarkets have been forced to adapt or risk losing customers to these new competitors.

This article will explore the ways in which supermarkets are moving in on this $100 billion industry, including the strategies they are using and the challenges they face.

Supermarkets' Strategies

Partnership with Meal Delivery Services

One strategy that supermarkets have adopted is partnering with meal delivery services. For example, in 2017, Kroger announced a partnership with meal kit delivery service, Home Chef. This partnership allowed Kroger to sell Home Chef meal kits in its stores, making it easier for customers to purchase the kits in person. This partnership was beneficial for both Kroger and Home Chef, as it allowed Home Chef to expand its reach while Kroger was able to offer a new product to its customers.

Similarly, in 2018, Walmart announced a partnership with meal kit delivery service, Gobble. This partnership allowed Walmart to sell Gobble meal kits in its stores and on its website. This move was part of Walmart's larger strategy to expand its online grocery offerings.

Launching Their Own Meal Kits

Another strategy that supermarkets have adopted is launching their own meal kit services. In 2017, Albertsons launched its own meal kit service, Plated. Plated meal kits are available for purchase in Albertsons stores, and customers can also order the kits online for home delivery. This move allowed Albertsons to offer a new product to its customers and compete with other meal kit services.

In 2018, Kroger launched its own meal kit service, Prep+Pared. Kroger meal kits are available for purchase in its stores and can also be ordered online for home delivery. Kroger's meal kits are designed to be cooked in 20 minutes or less, making them a quick and convenient option for busy customers.

Offering Ready-to-Eat Meals

Supermarkets have also begun offering ready-to-eat meals to compete with meal delivery services. In 2017, Whole Foods launched its own meal delivery service, Whole Foods Market Meals. The service offers fully-cooked meals that are available for delivery or pickup in stores. Whole Foods also offers a selection of prepared foods in its stores, such as sandwiches, salads, and hot food bars.

Similarly, in 2018, Walmart announced that it was expanding its ready-to-eat meal offerings. The company added 250 new items to its selection, including sushi, salads, and sandwiches.

Challenges

While supermarkets have been successful in moving in on the meal delivery and meal kit industry, they still face some challenges.

Consumer Perception

One of the biggest challenges that supermarkets face is consumer perception. Meal delivery and meal kit services are often seen as more high-end and exclusive than traditional grocery stores. Supermarkets may struggle to convince customers that their meal kits and ready-to-eat meals are just as good as those offered by meal delivery services.

Supply

Another challenge that supermarkets face is supply. Meal delivery and meal kit services typically work with local farms and producers to source their ingredients. This allows them to offer customers fresh, high-quality ingredients. Supermarkets may struggle to compete with this level of freshness and quality, as they often source their ingredients from larger suppliers.

Logistics

Logistics is another challenge that supermarkets face when moving into the meal delivery and meal kit industry. Meal delivery and meal kit services have established supply chains and delivery networks that allow them to efficiently deliver their products to customers. Supermarkets may struggle to replicate this level of efficiency, particularly if they are new to the industry.

Pricing

Finally, pricing is a major challenge that supermarkets face. Meal delivery and meal kit services are often more expensive than traditional grocery stores. While supermarkets may be able to offer lower prices for their meal kits and ready-to-eat meals, they may struggle to compete with the prices offered by meal delivery services.

Conclusion

Supermarkets are moving in on the $100 billion industry of meal delivery and meal kit services by adopting a variety of strategies, including partnering with meal delivery services, launching their own meal kits, and offering ready-to-eat meals. While supermarkets have been successful in moving into this industry, they still face challenges related to consumer perception, supply, logistics, and pricing.

As the meal delivery and meal kit industry continues to grow, it is likely that supermarkets will continue to adapt and innovate in order to stay competitive. It will be interesting to see how the industry evolves over the coming years, and how supermarkets and meal delivery services will continue to compete for customers.