It’s the retailers that have the secret sauce for Meal kits to succeed

Consumers will always be in the driver’s seat, leading the way with their ever-changing preferences, priorities and purchasing habits for the retailers to make the right decisions in going forwards. To get ahead of the competition, retailers will need to adopt and adjust to new ways of meeting customer needs.

In this day and era where people spend most of their time at work, convenience of food shopping is even more appealing than ever before. People are more inclined to get attracted to propositions that provide efficiency and better health benefits.  In the light of this trend, it is not shocking to see the success of meal kit services in such a short period of time.

Delivered to your doorstep, meal kits are mostly preferred by on-the-go consumers with poor time availability, trying to make time for leisure activities between end of work and dinner.

The kits give subscribers the ease of having all ingredients readily available to use with recipes to put together a fresh home-cooked meal, while cutting down on the time spent on planning what to have for dinner and going to the supermarket to purchase these ingredients.

Although targeting a large span of shoppers, more attraction is expected to rise from millennials who lack the experience in putting together their own recipes, and working parents looking for handy and healthy alternatives.

All good things come with a price…

Looking at cost of individual ingredients in a recipe, getting your meal kits delivered to your home is pricier than picking the same products at the supermarket let alone if you had time to go to the actual markets. To some, this might feel like the price to pay for the comfort provided, for others not so much.

I recently unpackaged a meal kit and the biggest downside for me and therefore the target segment would be the amount of packaging waste involved in this process. Considering the rising initiatives towards reducing level of carbon footprint, these kits, where products are individually packed, might not seem the most sustainable alternatives to most consumers. Although perhaps as consumers we are overlooking the potential reduction in food waste and reduction in the kilometres travelled as there the supermarket is missing from the value chain.

How to get ahead

Online grocery shopping is not nearly as mature as brick and mortar stores in Australia, with 3% of consumers contributing into the country’s $105.3 billion sales annually.

Physical store locations will continue to be the places where the food choices are made, however it is no doubt that “direct-to-consumer” online options will be substantially disrupting the food and grocery market particularly when consumers are “routine’d” by the convenience that comes with it. Which perhaps is already creating the urgency for retailers to find new ways to gain the competitive edge.

Rather than just putting their own meal kits on the shelf, which feels like a lazy response. Retailers, in fact, already have the strongest proposition to directly counter and get in front of the competition by utilizing the size of their well-established supply chain and buying power, turning stores into mini assembly units and fully embracing convince delivery models.

Putting together these pieces, may need a acquisition or creation of a new brand to kick start the online market place, a relationship with a last mile provider such as Uber eats and setting up smart recipes that use current SKU’s that could be assembled using store employees for collection or home delivery, added with a little common sense to use minimal packaging and they have a recipe to lead the market.

Retailers are quick to admit they are not manufacturing experts and shy away quite easily, perhaps it is time for them to realise vertical integration means building a new competence and capability that spans retail, supply chain and manufacturing.

Written by Ezgi Dark, consultant at Pollen Consulting Group and first published https://www.retailworldmagazine.com.au/emag/2017/RW-NOV-2017/html5forpc.html?page=60