Without a doubt, says Paul Chapman, director of bakery and deli at Landover-based Giant Food, who was speaking to FoodNavigator-USA three weeks after opening a new store concept in Olney, Maryland.
“I think the industry has been very conservative in the past and there is much more of an appetite now to take risks, try new things and see what sticks, to develop that fail fast mentality,” said Chapman. “So far, we’ve seem a significant increase in sales of prepared foods and immediate consumables, and some product lines we’ve sold that we’ve never sold before have really gained traction.”
But he added: “Store designs are not a one and done that will stay for five, 10, 15 years; we have to be much more responsive.
“So I can’t say that every single element of this store will work in every single Giant Food location. But we have a menu of offerings that we’ll pick from [every time we open a new store or renovate an existing one]."
We have to make it easier for people to get what they want
The Olney store - which features enhanced hot food offerings, a gourmet cheese shop, kombucha on tap, a dedicated plant-based meat segment, expanded produce and natural food offerings, a sushi bar, full-service meat, seafood, bakery and floral departments, and a Starbucks – is designed to make life easy for shoppers doing small trips as well as bigger shops, he said.
“The deli and grab & go prepared food bars, which are typically located at the far end of the store, we’ve brought them to the front.
“I’ve been in this business 30 years and we used to design stores so people would have to go all the way to the back of the store to get fresh bread and deli items because you want them to get a $100 or a $150 basket. But [you make just as much money] if they spend $8 this morning on the way to work, another $30-40 this evening, and another $40 on Wednesday and on Friday.
“We have to make it easier for people to get what they want."
Fresh food and profitability
When it comes to fresh food - which is labor intensive and risky if you don’t have the right selection - there is always a tug of war with the center of the store, which “drives a lot of profitability,” said Chapman.
However, a compelling fresh food offer can turn your store into a destination and bring in shoppers that will spend money on more profitable items elsewhere in the store, said Chapman.
“What we do know is that when a prepared food item is in the basket, it increases purchases in other categories of the store that will drive profitability. When you move into this space, it’s an investment, but you have to be strategic about it and view it holistically from a total store perspective. We track who is new to the store, are they coming back, how do we meet their needs and stay relevant?”
Everyone is still trying to figure out how meal kits work in bricks and mortar
This is a particular issue with meal kits, which are high ticket items with a short shelf-life, not a winning combination if you don’t keep tight control of demand planning, said Chapman.
“Shrink is tricky with meal kits, but we now have a really good idea of how many our stores sell per week, so we are allocating products accordingly rather than having extra inventory that’s going to date really quickly.”
He added: “Retailers all want to be in this space, but I think everyone is still trying to figure out how meal kits work in bricks and mortar. It was a strategic play for us to partner with Hello Fresh because we wanted a brand that would give us instant credibility, and they’re doing significantly better [than meal kits previously sold at Giant stores].
“Having new items cycling in has also been critical, as when we pulse in new items customers recognize that instantly and buy them.”
‘Everybody wants to sell food now’
What supermarkets have come to accept, he said, is that they are no longer just competing with each other, and they have to find a way of meeting consumers where they are.
“We’re competing with anyone that sells food, whether it’s the convenience store that sells fried chicken and sandwiches, or a local restaurant. I was even at a car dealership not too long ago, and you could get a haircut and they had a gallon of milk you could purchase before you left, I was thinking you’ve got to be kidding me. But everybody wants to sell food.
“So sometimes you have to think how do you partner instead of compete? So if it’s UberEats or GrubHub, maybe we can become friends instead of competition and use those services to deliver our fresh food and prepared meals?”