No one goes into a hardware store to buy a 3/4” drill.
What they want is a 3/4” hole!
That basic Marketing 101 concept applies to grocery stores, too. Who goes to the grocery store to buy, well, groceries? What we want is DINNER!
- But, can you go into a grocery and find “dinner”? Or “breakfast”? Or, “great lunches”? No. Instead, there is a produce section. And then a canned goods section. And then the frozen foods section. Plus, an overwhelming assortment of choices, whether it is mustards or pickles or pasta or….
Meanwhile, consider the shoppers, who are increasingly purposeful. They have a shopping list, and they stick to it. They are spending less time (and money) in the grocery stores. And, a greater proportion of their in-store time is spent simply navigating the store (what they want is on the perimeter), or checking out.
This is an industry that is ripe for disruption. And sure enough, that is happening. Consider how the meal-in-a-kit delivery services – e.g., Blue Apron, Plated, HelloFresh – essentially are re-inventing the grocery store.
- You sign up online; they deliver to your doorstep a box that contains the fresh, raw ingredients for 3 to 5 meals, all in the proper proportions (no wasted food or languishing jars of spices), along with explanatory recipes (with pictures) from their in-house chefs.
- You do the chopping, cutting, and cooking.
- In 35 minutes or so, you sit down to a home-cooked meal.
- All without the time-consuming demands of meal planning or traditional “grocery shopping”
Yes, This IS Retailing!
Alas, these new businesses do not regard themselves as retailers(!) But to us, everything they are doing is what retailers do:
- Selling to the ultimate consumer
- Sourcing product from carefully-selected suppliers
- Editing the selections - limited meal choices each week
- Educating about new products or cooking techniques
- Engaging the customer in an experience - in this case, home cooking
But Wait...There's More!
Very High GMROI
Plus, they do it all essentially on special-order. That is, customers sign up for next week’s meals; these services don’t carry inventory, but instead, buy only what they already have sold.
High Growth Potential with Low Fixed Costs
And, as a web-based delivery service, they can grow their customer base at a faster rate than fixed costs. The 3 services we cited can deliver to 85%-95% of the continental U.S. (And HelloFresh also operates in Australia, Europe, and the UK.)
Remember, “value” for customers is benefits received for the burdens endured.
In our view, these meal-kit delivery services are delivering great burden-reducing value to the customer! And, whether they realize it or not, they are reinventing the grocery store in the process.
We believe this offers, ahem, much food for thought for all retailers.
- What are the burdens that your shoppers must tolerate?
- How might you relieve those burdens?
- How can you increase the value they receive from your stores?
- And how can you do that before some “disruptive” competitor steals their hearts away??
