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Restaurants wax, food retailer prepared meals wane, report says

By Hank Schultz , 05-Feb-2013
Last updated on 05-Feb-2013 at 18:21 GMT

Now that the US economy is limping back to somewhere close to where it was before the financial debacle of 2008, consumers are feeling a bit more flush and are returning to eating in restaurants more.  This has hurt the retailer meal solutions (RMS) market, a new report says.

The report, by Chicago-based Technomic, a research and consulting firm in the food and food service industries, shows that 38% of consumers say they purchase RMS from traditional supermarkets each week, compared to 42% who said the same in 2010.

“These consumers may be reversing the patterns they set a couple of years ago by heading back to restaurants," said Darren Tristano, vice president of Technomic. "For retailers to gain or maintain their share of foodservice dollars, they'll need to clearly stand out from restaurants.”

Not only are overall numbers of RMS consumers dwindling, they are becoming more selective, and are placing a higher value on a number of attributes of RMS offerings, the report shows. Consumers are now basing their RMS buying decisions not only on convenience, but on a calculation of how the food compares to a restaurant meal, not only in terms of its taste and comparative value, but also in the experience the meal delivers.

“To compete (RMS providers) are gong to need to meet consumer expectations and deliver the same type of experience that restaurants do.  Quality, health freshness, even a dining experience,” Kelly Weikel, senior consumer research manger for Technomic told FoodNavigator-USA.

Meeting expectations requires balancing act

Meeting these expectations can be a delicate balancing act for an RMS provider, Weikel said.

“The top three things consumers care about really are about the food qualities: taste, freshness and quality, those are all really high.  But price and value are also very high.  So I think it’s keeping in mind what consumers are willing to pay."

Some broad strokes of the market remain unchanged. Convenience, especially as it gives birth to routine, is still a big driver.  The report found that four out of five of consumers who buy RMS at given locations buy meals there at least once a month.  Of those, 43% said they bought an RMS at least once a week.

There is a little tweak on those figures, Weikel said.  Top end stores, such as Trader Joe's, Whole Foods and some other specialty food retailers, are quite as tied to being a convenient solution and can rely on their customers going out of their way to purchase the meals they offer.  For this segment, health, freshness, taste and overall quality override attributes like convenience and price.

The health and nutrition attributes of the food are also a big driver in the 18-34 age bracket, the report found.

Another trend toward more diverse ethnic flavors, textures and ingredients is affecting the RMS market and can be tied to changes in the overall demographics of the US, Weikel said.

“Ethnic foods in general are such a trend just because the diversity of our country is changing.  I don’t see it stopping and it goes beyond RMS."

Enlisting partners with credibility

Once again, meeting this consumer expectation can be a challenge, Weikel said.  In some cases, it could push retailers beyond their meat-and-potatoes comfort zones, and could stretch consumers’ credulity that such a provider could pull off a good paneer saag, for example.

In such cases it might make sense to enlist a partner, a brand that has credibility in the new space, she said.

“I think it would especially helpful if it was a noticeable brand name. One of the things we see about ethnic food in general is authenticity is very important.

“If you are trying to offer something that goes beyond what customers expect from you then partnering with that name that they recognize as being reputable for that type of food I think would definitely help.”

Technomic says RMS providers have continually raised the quality and diversity of their offerings since the company first began tracking the market in 2007.  But even as retailers fine tune their offerings to better fit the changing market, the basics remain the same, Weikel said.

“Convenience, along with price—those are some of the fundamental areas that no matter who you are you are going to have to supply those."

A copy of the report can be purchased on the Technomic website .

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