Consumers are buying nearly half their food at restaurants and takeout establishments, up sharply from 25% in 1980. Fueling the trend is a rise in dual-income households with time-starved couples, as well as young adults who don’t want to cook.
"Families still eat most of their main meals at home, but a dramatically increasing number of those meals are fully or partially prepared by outside sources," says Todd Hultquist, spokesman for the Food Marketing Institute.
Conventional supermarkets still account for a big share of the grocery business — about $600 billion of the $950 billion market. But they now compete with supercenters, warehouse clubs and other formats offering an array of products at lower prices.
The changes force supermarket operators to be nimble and to cater to local shoppers. For example, they stopped using milk as a loss leader to lure shoppers because now even the corner gas station carries dairy products. Rather, supermarkets shun a one-size-fits-all strategy in favor of offerings tailored to the neighborhood.
"Future success for supermarkets depends on understanding and effectively responding to the needs of their shoppers better than non-traditional operators (do)," says Jon Hauptman of retail consulting firm Willard Bishop Consulting.
Most competitors offer a price advantage over traditional supermarkets. But supermarkets are working to defend their turf:
•Value. Supermarkets are adding products that save time. In the meat case, there are prepared items such as fish already seasoned, or chicken and sausage on skewers ready for the grill, or a variety of salads in the deli.
•Convenience. Supermarkets offer more one-stop solutions, including pharmacies, floral shops and health and beauty products.
• Extras. Supermarkets provide services such as coin-counting machines and items such as gift cards and phone cards that can be used like cash.