The convergence of the traditional retail and foodservice distribution channels has created a game-changing third channel—retail foodservice—which has elbowed its way into the food business with new products, new distribution challenges, new menu options and a new food world order. At a lightning pace, it is compelling more and more supermarkets to place restaurants inside the stores, expand hot foods offerings and create new departments to manage it all.
Some companies do not consider the future until it is here. But by then it is too late. Anticipating change and doing the research to validate your beliefs is only a part of what it takes to be a market leader. Sadly, many just want to be next, letting others shoulder the risks. Too few want to be first. If you manufacture retail or foodservice products or operate supermarkets, convenience stores, restaurants, drug stores or other formats, it is time to gather your production, marketing and sales teams and come to terms with a tectonic shift that is fast becoming mainstream.
To achieve their next levels of growth, manufacturers and operators must adopt a more strategic approach to go-to-market planning, business planning and brand development to satisfy ROI expectations that seem to change from quarter to quarter. Expanding cultural diversity and the power of social media are driving new notions of what people eat, when they eat and where they eat, changing the rules of food marketing forever.
The power of social media has created crowd-sourced communications influences empowering consumers to speak directly to food manufacturers and operators defining retail foodservice as a “pull” vertical channel. This forces manufacturers to reciprocate and communicate one on one with consumers in order to control their brand messages and continue bringing products to the market without succumbing to distribution’s interpretation of their product offerings and messaging.
Now is the time for frontrunners to take the next step and recognize retail foodservice as a separate distribution channel, assigning it management, C-level and manufacturing titles. No need to wait until consumers’ meal planning routines are irrevocably dictated by “bullish” companies such as Amazon, Walmart, Alibaba, Kroger and numerous regional giants that are already reshaping the landscape of food marketing.
Establishing a Proactive P&L Strategy
Much has been reported about the proactive and reactive ways operators are tackling consumers’ meal planning notions. Approaches range from in-store sandwich kiosks, hot and cold food buffets and prepackaged meals to la carte departments, arrays of cold case meals and assortments of diverse regional and ethnic flavors, each designed to satisfy the mixed bag of meal planning schemes coded into the DNAs of time-starved shoppers.
The retail foodservice future I foresee is measured by revenue drivers such as sandwich kiosks and prepackaged meals, each with its own P&L strategy, and a much stronger and proactive approach toward growth incentives. This differs from the two traditional channels that clarify their P&Ls for accurate performance measurements, with one tracking foodservice business segments and the other retail categories.
Recognizing that retail foodservice is not an isolated supermarket department nor an add-on to traditional foodservice will improve revenue opportunities, inspire more accurate market research and streamline logistics. Staffing the channel with positions of responsibility and accountability to growth performance will also deepen the commitment to maintain the energy of its growth potential. As channel players, manufacturers’ and operators’ visions will be clearer as they create go-to-market strategies that draw direct benefits from:
- More cost-effective budgeting for growth
- Improved food safety
- Better understanding equipment needs
- A clearer picture of logistics management
- Better market research
- Improved go-to-market planning and execution by harmonizing both traditional “push” channels with the “pull” of retail foodservice
- Improved product development
Go-to-market plans aligned with the channel you want to target, as well as the market segment within it, are essential to any forward-thinking strategy. But in today’s evolving retail foodservice channel, it is more important for leaders to launch the target strategies that establish market positions focusing on consumers’ lifestyles and needs as they, too, evolve.