HIM Insight Account Analyst Alice Dolling offers SLR readers some fascinating observations into the latest trends shaping the burgeoning food-to-go landscape.
by Alice Dolling
In 2017 shoppers are becoming increasingly fast-paced – wanting what they want instantaneously, and more so than ever they want it on the move. It is therefore hardly surprising that food-to-go is expected to grow yet further this year and beyond.
However, as the food-to-go marketplace competition intensifies we are seeing the convenience sector struggling to keep up with this growth, with HIM predicting the value of the food-to-go mission in convenience to grow at a rate of only 0.9% over the next three years. Fierce competition comes from food-to-go specialists.
Food-to-go specialists are growing in-store numbers, with retailers such as Leon and Pret expanding outside of London. They always keep one step ahead of the game and adapt their range and store experience to tap into the latest consumer trends – in 2017 they have adapted to incorporate the continuous evolution of health (including the rise in veganism, vegetarianism, free from diets and flexitarians) and the growing demand for personalisation and digital interaction. C-stores must keep up with and not shy away from these trends to compete, whilst also achieving the basics by understanding shoppers’ decisions, motivations and importances.
Firstly, stores will need to understand how to attract food-to-go footfall. The main product driving food-to-go shoppers into c-stores is chilled food-to-go, whereas the main product driving them into food-to-go specialists is hot food-to-go. Retailers and operators must make sure information on these categories is clearly communicated to shoppers in the surrounding area. Promotions will be effective in enticing shoppers and hence driving shopper traffic into store and affecting overall food-to-go sales. Promotions can be a point of difference from food-to-go specialists for c-stores because the specialists rarely offer promotions.
- 30% of Scottish shoppers intend to buy a meal deal compared to the total market average of 35%
- Scottish shoppers are prepared to pay up to £4.25 for a meal deal, compared to the average shopper who is prepared to spend up to £4.29
- Scottish FTG shoppers are purchasing 3.3 items compared to the average shopper who is only purchasing 2.1 items
- The Scottish FTG shopper is older than the average FTG shopper (46 vs. 39)
When in-store, food-to-go shoppers’ purchasing behaviour varies throughout the day. For example, hot food-to-go trade is greatest in the morning and therefore retailers must ensure availability of this sub-category during this period.
Hot food-to-go will be a key category in driving up c-store food-to-go shopper value, and a key category to help convenience stores compete against food-to-go specialists. Currently, in convenience stores hot food-to-go penetration overindexes in symbol and forecourt retailers; an extended range will be needed in these sub-channels. However, there is a clear opportunity to grow penetration within managed and supermarket convenience.
To do this, it will be vital to understand what these shoppers’ product preferences and importances are in order to adapt ranges to suit them. Managed and supermarket convenience shoppers are more demanding; both over-index greatly in wanting more premium and healthy options in-store. C-stores can take inspiration from food-to-go specialists to achieve this.
We have already seen convenience stores take best practices from food-to-go specialists and create full hot food-to-go solutions for their shoppers that adhere to demanding customer needs. One example is BYO Burgers, an Aryzta solution being used by Spar Gourmet in Dublin. It takes into consideration shoppers’ want for a personalised and digital service by allowing shoppers to heavily customise their meal (burger or pizza) by using tablets in-store. They also offer a home delivery service appeasing the new shopper who expects fast consumption and fast door-to-door delivery, an expectation since the introduction of Deliveroo and Just Eat.
Hot food-to-go offers opportunities to upsell to maximise sales and shopper value. This is achieved by locating hot food-to-go besides other products the category is usually purchased with. For example, cross-merchandising the category beside hot drinks-to-go. Not only will this ease the shoppers’ shop, but it will also create additional purchases if the hot food-to-go shopper is tempted by a complementary item in the same location.
Hot drinks-to-go should also be a focus area for convenience store retailers. Retailers are currently under immense pressure – they are facing an influx of government legislation, inflationary pressures and a continuing price threat from the discounters, just to name a few – and as a result their margins are being squeezed. Hot drinks-to-go offers a healthy margin for retailers.
In addition to the margin benefit hot drinks bring, they also drive footfall – almost three-fifths of hot drink to go shoppers say it is the main reason they are coming into store.
Hot drinks-to-go are often involved in meal deals; we have seen combo deals from the likes of Aryzta and Seattle’s Best who do a coffee and donut deal in Mace and Spar stores in Ireland. These suppliers have done a great job in communicating the offer to shoppers via digital screens on the coffee machines.
Meal deals are not limited to hot drink-to-go combos and currently play a big role in food-to-go in c-stores and food-to-go specialists. Over one-third of food-to-go specialist shoppers are purchasing a meal deal and one in five food-to-go shoppers are purchasing one when it is offered, although this differs by convenience sub-channel. Getting a meal deal offer right will therefore be very important.
Both convenience store and food-to-go specialist shoppers believe meal deal offers can be improved. A lack of healthy options in meal deals is especially upsetting convenience store shoppers – these will be imperative in food-to-go development.
In c-stores the meal deal rule of three works: nearly two-thirds think that three items make the perfect lunchtime meal deal, whereas shoppers in food-to-go specialists are happier with smaller meal deals. In addition to a main item, the top categories shoppers want to see in meal deals differ slightly for convenience stores and food-to-go specialists; the top item in convenience stores is crisps & snacks, whereas in food-to-go specialists it is soft drinks.
Suppliers within these categories will be best placed as one of the two or three meal deal items. It is, however, worth considering the future of these traditional three-piece meal deals. In the advanced Irish food-to-go market we do not see shoppers being tied to a three-item lunch deal, and c-stores do not push these types of promotions like they do in many UK retailers. Could this be the way food-to-go is going? In 2016 we saw Sainsbury’s largely scale back their meal deal offer, removing premium sandwiches, subs, pasta pots, cakes, and more in order to regain some margin. As margins continue to be squeezed in convenience we might see other retailers follow suit.
However, in the UK this has not largely happened yet and we know that shoppers’ barriers to purchasing more food-to-go is not primarily led by lack of meal deals. Fourteen per cent of food-to-go c-store shoppers believe a lack of inspiring products prevents them from purchasing more food-to-go than they currently do. Retailers should therefore offer an inspirational range. One way could be advertising a product alongside a suggestion of an occasion during which they could consume it – a picnic, for instance.
Messaging around the top occasions will create high levels of engagement, however, the occasions that food-to-go shoppers are tapping into will vary on a category by category basis. Although, a theme across all categories is that food-to-go shoppers are purchasing for instant consumption, therefore products meant to be consumed chilled (e.g. soft drinks) need to be located in the chiller, not main shelf, and smaller non-take home pack formats will be required.
Messaging in-store cannot stop there. Retailers and food-to-go specialists must appreciate shoppers’ purchase decision hierarchies and create communication that facilitates this decision-making process. For instance, brand and price play large roles in food-to-go shoppers’ decision choices in both convenience stores and food-to-go specialists, and therefore these two things must be clearly communicated on POS.
Brand plays the largest role in savoury pastry, sandwiches and instore bakery categories. Another big importance for shoppers is health. Nearly two fifths of food-to-go c-store shoppers believe that a range of healthy options and alternatives is important to them in-store. Even though this is lower than the percentage of shoppers in food-to-go specialists, it is still substantial. What healthy means to shoppers is constantly evolving and, unsurprisingly, we have seen food-to-go specialists keeping up. In terms of free from products, coco porridge normally affords the same shelf space as regular porridge in outlets such as Pret. For meat-free options, Veggie Prets are spreading and all Pret a Mangers now have vegetarian fridges. Brands have also taken on healthy eating trends: Poke (now mainstream, being offered on Abokado), ‘adaptogens’ and seaweed & golden lattes.
Additionally, the in-store experience is of paramount importance for food-to-go shoppers. The food-to-go shopper has a higher basket spend, has a higher basket size, visits more often and is more likely to recommend a store if they have a positive in-store experience, so therefore efforts need to be made to improve it. Firstly, start with the basics: key in-store experience factors are not being met for food-to-go shoppers, such as ease of shop and cleanliness of store, and therefore these need working on first.
Locating food-to-go where customers want it will ease their shopping experience. Over one-third of c-store shoppers believe the main food-to-go fixture should be a chiller at the front of the store. It is also worth considering that the food-to-go c-store shopper spends more when there is a separate till/area for customers to purchase their food-to-go.
Four out of the six top factors that food-to-go c-store shoppers think could improve their in-store experience are to do with speed of service. Suppliers should create an education piece to encourage retailers to implement time saving technologies. Once the basics are met, suppliers, retailers and food-to-go specialist operators can build the in-store experience to offer a fuller experience for shoppers.
Technology is a great way to enhance a shoppers’ in-store experience. Food-to-go shoppers are more likely than your average c-store shopper to want to see offers direct on their mobile device, while younger shoppers are more likely to want to engage through tech. Suppliers can work with retailers to use beacon or Wi-Fi technology to function with either their own apps or pre-existing apps such as Big DL and Zapper.
We have seen retailers use technology well to tap into the current personalisation consumer trend, for example, Vita Mojo in London allows shoppers to personalise their hot food order either on their app, on their website or on tablets in-store. It allows shoppers to adjust food quantities and ingredients to suit their preferences and health needs.
Innovation like this, which offers a relevant and full range and experience, is the direction that convenience stores will want to take in order to flourish within food-to-go and compete against specialist outlets and the new kids on the block.
