The World of Marketing

Part I: The World of Marketing
Title: Part I Case Study: The Rise of the Grocerant

It’s time for dinner. There’s nothing to eat at home. What are your options? Go to a restaurant and have someone prepare the food. Go to the store and buy food to take food home and prepare. Or another option: the grocerant. A grocery store-restaurant hybrid.

“The market has become very blurred,” said NPD restaurant analyst Bonnie Riggs. “The competition was just the restaurant down the street, but it’s also now places that offer prepared meals that compete directly with restaurants.”

While grocery stores have featured salad bars and grab-and-go counters for years now, the “grocerant” concept has evolved beyond that. Often featuring sit-down services, Wi-Fi, made-to-order meals, and alcoholic beverages, grocerants are designed to keep the shopper in the store longer.

“You’re still going to have stores that pile it high and sell it cheap. That’s one type of consumer and that’s one type of supermarket, but you’re going to see less of those and more of this new hybrid concept,” said Phil Lempert, self-described “supermarket guru” and food service analyst.

“The grocers are putting time and effort in this idea of ready to eat,” said Cheryl Flink, chief strategy officer of Market Force, explaining that prepared meals are the current big trend in supermarkets because customers are seeking convenience without sacrificing food quality.

According to reports from The NPD Group, grocerants generated 2.4 billion visits and $10 billion in sales in 2016. Grocerant visits have increased close to 30% since 2008.

The increase in grocerants is being driving largely in part to the shopping trends of millennials as they seek healthy, convenient, cheap food options. A grocerant meal costs $4.22 on average, according to NPD, compared to $7.96 at a fast-casual restaurant, a 53% difference.

“Give the millennials what they want — fresh, healthier fare and a decent price — and they will come,” said David Portalatin, vice president of industry analysis at NPD Group. “Millennials’ interest in the benefits and experience supermarket foodservice offers will continue to be strong over the next several years. This forecast bodes well for food manufacturers and retailers who have their fingers on the pulse of what drives this generational group.”

Unlike the mall food courts of past years, grocerants have something else to offer: alcohol. Stores sometimes offer events centered around drinks such as trivia nights or Sunday morning mimosas.

“All the ones that I have seen have included [a bar concept], and I think for good reason,” Lempert said. “As we continue to see, people like being able to walk around the store more relaxed and have a glass of wine or a beer while they’re shopping. The good news is for the retailer if they do that they’re slowing down and they’re taking more time in the store. They’re seeing more new products that maybe [they’d miss] if they’re just running in and out in 20 minutes.”

For many, Whole Foods Market has been the ideal model for grocerants since the beginning. They have been offering salad bars and ready-to-eat options since the store’s inception almost 30 years ago. They continue to lead the industry as they expand offerings. About 15% of a store’s sales usually comes from its eateries, said Andy Sasser, the chain’s global culinary operations coordinator.

“We’re not looking to [other stores] for inspiration,” said Tein Ho, the vice president of culinary and hospitality for Whole Foods Market. “We’re always trying new things to make the experience better for our customers. Wine tasting in a store? Dude, that was like early ‘90’s man. That’s nothing new. We’re pushing ourselves for the next new thing. I can only imagine that others will follow.”

Sources:
S. Whitten, “The rise of the ‘grocerant’: How millennials impact supermarket growth,” CNBC, June 14, 2016, http://www.cnbc.com/2016/06/14/the-rise-of-the-grocerant-how-millennials-impact-supermarket-growth.html (accessed June 27, 2017); V. Dixon, “The Rise of the Gorcerant, “Eater, February 27, 2017, https://www.eater.com/2017/2/27/14706474/whole-foods-restaurant-grocery-store (accessed June 27, 2017); Z. Meyer, “Why ‘Grocerants’ are the new trend, taking bite out of restaurants,” USA Today, April 5, 2017, https://www.usatoday.com/story/money/business/2017/04/05/grocerants-take-bite-out-restaurants/99723098/ (accessed June 27, 2017).

Short Answer
1. Explain how events at grocerants hosted by the store could be used as relationship marketing (See Section 1-3).

2. Explain some of the marketing planning required for grocerants (See Section 2-3).

3. Explain the competitive advantage that grocerants give to a store (See Section 2-6).

4. Describe the target market for grocerants (See Section 4-1).

5. How could grocerants use social events to market to different ethnic groups? (See Section 4-4).