Retailers

Coborn's, Albertsons Double Down on Meals Biz

Grocers talk what's next for retail foodservice
Albertsons storefront
Photograph: Shutterstock

After one of the most challenging years to retail foodservice on record, grocers are eager to turn the page on the pandemic and its largely crippling impact on the department. But in contemplating the hottest trends for 2021, some grocers are looking back for a better view to the future.

As consumers continue to eat mostly at home, meal solutions that satisfy a variety of cravings, from comfort food to restaurant-quality cuisine, are increasingly in demand. And as more consumers burn out on daily meal prep, holidays and special occasions provide an opportunity to take a break from cooking and let the local supermarket prepare the feast.

“We’ve seen a lot of growth in meal solutions. Family meals were one of the largest gains for us in 2020, and we see that continuing,” says Josh Croson, director of deli for Coborn’s Inc. in St. Cloud, Minn.

“In holiday meals, we did 2.5 times the volume in 2020 than the previous year,” adds Croson, who attributes the gains to widespread consumer kitchen fatigue. “Restaurants have been closed for how many months now? Consumers want a meal where all they have to do is pop it in the oven and heat it up. And I think a certain percentage of people won’t return to the way things were before the pandemic.”

Albertsons Cos. President and CEO Vivek Sankaran agrees that meals are an increasingly important driver of growth in grocery. “We are going to get into the meals business. [And] I think you’ll see more of the restaurant business and the supermarket business converging,” he said during Morgan Stanley’s virtual Global Consumer and Retail Conference in December, according to a Sentieo transcript. 

As to shoppers’ top culinary cravings in 2021, regionality certainly plays a role, but beyond that consumers will be looking to deli prepared foods to fill a variety of needs from immune-boosting health-conscious fare to classic comfort food and restaurant-inspired date night dishes.

“Our deli trends are kind of all over the place—comfort foods because we’re in the Midwest, so pot pie resonates strongly in this market, but also restaurant-quality food and upscale dishes,” Croson says. “The unfortunate fact of COVID is that we’ve lost a lot of restaurants,” a fact he says is also driving demand for international cuisine.

Take a Number

While deli prepared was a growth engine for several years, those gains had slowed to single digits in 2019, to be followed by the substantial blow of self-serve closures at the start of the pandemic.

“A look at the 2020 numbers would certainly make it seem that prepared foods had a miserable year with dollars off 9.2% for the 52 weeks ending Dec. 27, 2020, vs. a year ago, according to IRI’s Integrated Fresh platform,” says Anne-Marie Roerink, principal with 210 Analytics. “But I think it’s important to look at greater nuance before we declare defeat.”

“For one, retailers had to close deli prepared self-serve options in late March, which brought sales down to far below prior-year levels. As retailers figured out how to leverage pre-packaged sales, we started to see improvements every single month,” she continues. “Figuring that deli-prepared averaged 28.7% below average in April and made a comeback to -9.5% in December, I think there are pockets of hope for 2021.”

Holiday meal solutions were a bright spot in 2020, up 21.9%, notes Roerink. “Now, in all fairness, it is a very small segment within deli prepared, but it does signal that there is consumer appetite to have a helping hand during the holidays,” she says. Looking ahead, grocers will want to ready for all holidays, especially those that are traditionally celebrated in restaurants.

Sales of meal components, such as side dishes that offer short cuts for the long game, are also up, finds Roerink. “After 10 months of cooking infinitely more than normal for most Americans, many are ready for a break,” she says. “As the virus isn’t going to give us a break any time soon, it means looking for time-saving solutions. I expect 2021 to be the year of the shortcut. Some will buy into meal kits, others will be looking for shortcuts in meat, produce or with the help of deli sides.”

Deli sides such as mac and cheese, potato salad and mashed potatoes were up 8.8% over 2020, according to IRI data. Attracted by a mix of some scratch and a bit of convenience, sides merchandised in the meat department are doing well, adds Roerink.

Another area that saw growth in 2020 is deli breakfast, she continues. And while not a retail foodservice sales powerhouse, this daypart is showing growth in a time of changing shopping patterns, as customers flock to stores in early morning hours hoping to avoid crowds.

“The growth in breakfast sales shows that deli prepared has the opportunity to recoup some of its lost sales share at lunch time during other meal occasions,” Roerink says. “Particularly urban stores are suffering at lunch time, given the work-from-home trend that has many more workers at home vs. in the downtown office. Considering different usage occasions can be a good way to chase growth in 2021.”

Digital Diets

Delis across the country, including those in Coborn’s stores, have been challenged since the start of the pandemic to provide the same variety and bounty of fresh food offerings, particularly when it comes to customized salads. As salad bars were one of the first in-store casualties of the pandemic, some retailers have turned to contactless automation, like that found in Chowbotics’ Sally the Robot, to offer shoppers fresh options.

Sally the Robot is a compact salad-making machine. About the size of a vending machine, Sally dispenses a full menu of salads, along with customizable options. Spurred by a need for safer self-serve experiences in vertical markets like grocery, Hayward, Calif.-based Chowbotics has also developed a mobile app for fast, contactless ordering through Sally.

Coborn’s introduced its first Sally in early November in its newest store in Otsego, Minn. Shortly after, it added another unit to its recently remodeled location in Princeton, Minn. The grocer now has three Sally the Robots in two stores. 

“The implementation was driven by the need to innovate during COVID to provide our guests with the staples they had come to expect from us in a safer format,” says Croson. “In addition, the added food safety and reporting options, along with the cutting-edge technology, are an added bonus as we move forward past the pandemic.”

In the age of personalization and automation, Coborn’s is exploring other ways to meet the consumer where and how they shop during a pandemic and beyond.

“With the introduction of Sally, we have been looking at ways to leverage technology to help provide our guests a more convenient shopping experience, through our expansion of online ordering and e-commerce to additional ways to offer grab-and-go items that have traditionally been offered through our service cases,” Croson says.

As vaccinations progress, many retail foodservice operators such as Croson are thinking ahead to what’s next. “It’s too early to say if we continue to evolve the automation piece. COVID threw a wrench into the day to day of our business. The big question is will customers want more automation after a return to normal?” says Croson, who adds Coborn’s is in the early stages of such discussions. “We’re looking to guests to see what they’re comfortable with, and we’ll continue to keep their needs in mind and adapt accordingly.”

Foodservice Shape Shifters

To get a bead on a bellyful of what consumers will want most from foodservice menus in 2021, WGB turned to sister Winsight research firm Technomic. “It’s not easy to forecast the future when the ground keeps shifting underneath,” say Technomic’s Aimee Harvey, senior managing editor, and Lizzy Freier, senior research manager, in the report What’s to Come in 2021.

But despite the many ambiguities that still exist as the world moves through the pandemic, Technomic’s outlook for the industry remains optimistic. Among its top picks for foodservice innovation and growth in 2021, three are particularly relevant to retail operations.

  1. Cleaner Menus: From reducing SKUs and highlighting core items to promoting items that cleanse the body, such as immunity boosters and new leafy greens, Technomic sees menus coming clean in 2021. Additionally, goals for a healthier planet and body will drive the menu placement of next-level nondairy milks and plant-based proteins.
  2. Digital Differentiation: Whether its facial recognition ordering systems or apps that allow shoppers to order a deli salad and beverage from the parking lot of their local supermarket, retail foodservice operations will continue to focus on the digital experience.
  3. Revisiting International Hot Spots: Given travel restrictions during the pandemic, consumers are increasingly craving global cuisine they can purchase from their local grocer. Technomic predicts a renewed interest in Italian, Mexican and Chinese fare.

 

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