Technomic Principal Wade Hanson, who specializes in retail foodservice, talks consumer confidence and creative new solutions. For a detailed look at WGB and Technomic's 2020 State of Retail Foodservice study, click here.
WGB: Retail foodservice has been severely impacted by COVID-19. What is your overall take on next steps on what promises to be a long and winding road to recovery?
Wade Hanson: One of the most important things that grocers will need to do over the months ahead is study the new needs of the shopper. Coming out of the pandemic into a recession means consumers will have value concerns. They will have a startling number of new visual cues they will be looking at to assure quality and cleanliness. And how they balance the concepts of “fresh” and “safety” will evolve. Grocers will have to plan for the purchase decisions of consumers to be very different. Understanding what is driving decisions and how you can positively influence perceptions will be essential.
The ongoing pandemic presents retailers with a whole new set of challenges for the category in the realm of department layouts and merchandising strategies to properly ensure safe social distancing. Do you think this will have lasting effects on retail foodservice floor plans of the future?
Without question. Safety considerations and shopper considerations will be major influencers in determining what the floor plan of the future turns out to be. Certainly, self-service stations of all kinds are under scrutiny. Consumers are already questioning these setups and indicating a low level of confidence that their health can be protected without significant changes. On the restaurant side of the business, we have seen Souplantation, a buffet style operation, close its doors and other buffet chains reconfigure to enable staff to serve guests. Likewise, salad bars, hot bars and soup stations are examples of areas that stores will readdress in some form or fashion. We are sure to see some creative new solutions coming out of the pandemic.
What retail foodservice items/categories do you recommend that retailers invest in going forward?
Center-of-plate items will always be critical, namely proteins. And grab-and-go items will take on greater importance as shoppers may be more comfortable with sealed, convenient items rather than made-to-order foods (which had been on the rise pre-COVID-19). But it is important to note that often shoppers want solutions more than any specific category of food. Grocers will benefit from having bundled solutions available that combine multiple menu parts. And grocers should attempt to better communicate how the shopper can achieve a complete solution in the prepared foods department rather than let the consumer assemble an ala carte meal without support.
Given the present dynamics in foodservice, what do you consider to be the biggest opportunities for retailers on the horizon?
Retailers need to recognize just how significantly the pandemic has affected parts of the traditional foodservice business—both restaurants and noncommercial operators. Tens of thousands of restaurant closures and a monumental drop in traffic for certain noncommercial operators (especially colleges, hotels, businesses and recreation venues) will present grocers with opportunities to attract new customers or attract existing customers for new meal occasions. Marketing prepared foods solutions outside of the store via a variety of means will be highly important for grocers.
Delivery has leapfrogged from the backburner to the front for all facets of grocery. What is your take on how influential—or not—delivery will be for the retail foodservice category in the near and long term?
Delivery has been a growing force across foodservice for the past several years. The rise of third parties such as Uber Eats, Grubhub and DoorDash was transformative. Consumers could get what they wanted, when they wanted it. And it was an additional means of reaching new customers for many operators (though many headaches came along with that). But the pandemic has developed a delivery comfort and reliance within consumers. Ordering food and beverages from all different types of operators and retailers has become normal.
Online ordering of groceries has also surged over the past few months. Online grocery shopping had only been adopted as a normal practice by a small minority until recently. Now, many consumers express that they will not go back to in-store shopping.
Grocers will need to focus on better and more efficient ways of getting prepared foods to be part of the delivery experience. A lack of doing so will stunt sales in the department.
What would you envision to be the best thing you could tell us a year from now about supermarket foodservice?
The COVID-19 crisis was not a function of economic challenges or a lack of consumer demand for foodservice. The crisis was not rooted in fundamentals. So there is hope that foodservice recovery will occur at a faster pace than in an economy-sparked recession. In a year, it would be great to objectively look at the channel and say, “2020 was really difficult, but sales have bounced back considerably.” Technomic has projected that while 2020 supermarket foodservice will likely be down by double digits due to the pandemic, 2021 could see shoppers surge back to prepared foods leading to growth of 15% or more in 2021.