The Meal Kit As A Grocery Play

Grocers are taking on the meal kit industry by rolling out ready-to-cook options in their aisles, but they face a choice: Should they carry another brand’s meal kits or develop their own kits in-house? Oregon-based New Seasons Market, for example, decided to pick the latter option – and used their own kitchens to produce the kits. In addition, the grocer added a bit of a twist to the meal kit concept: It decided to roll out a more premium offering and enlisted the help of double Michelin star chef Matt Lightner to develop the recipes. For the initial rollout, Lightner created five seasonal recipes that made use of ingredients from local farmers and producers.

When it came time to develop the meal kits, New Seasons had a bit of advantage: It already sells fresh produce that can be used in the kits. “We have access to amazing ingredients,” New Seasons’ Group Director of Merchandising & Purchasing of Culinary Tracy Hardin told PYMNTS.com, adding that the company’s local buyer can bring in fresh produce that might not be sold in other ingredients. That got her wheels spinning.

With many of years of experience running food service, Hardin knows there are pros and cons to producing a product in-house – or bringing in a manufacturer. While companies such as New Seasons might have to contend with higher labor costs by producing a product themselves, Hardin said the latter option comes with some advantages: Grocers such as New Seasons Market, for example, can have more influence over quality by making the products in-house. The reason is that one can’t influence a manufacture’s operations directly, and Hardin said “the quality play was really big for me and, especially, Matt.”

The Kits

New Seasons also chose to make the meal kits in-house for another reason: Customers wanted organic ingredients, and Hardin found that it was difficult to find a manufacturer that could make meal kits with them. (Hardin is seeking to do a better job of serving vegan and vegetarian customers.) To that end, the grocer offers meal kits for recipes such as turnip curry. Even so, the kits offer traditional meat and fish options. “I think we’re still figuring out what the right ratio is for the meat and fish and the vegan, vegetarian line and other lifestyle diets customers are looking for,” Hardin added.

And, in comparison to meal kit services that require subscriptions, the kits at New Seasons offer flexibility. While there is a group of consumers with very disciplined weekly routines, Hardin said most consumers are probably not locked into schedules. Hardin’s schedule, for example, changes when she travels for work: As a result, she has had to cancel subscription-based meal kits because she ended up not preparing one or two of the meals. In addition, traditional meal kits may not offer too much of a culinary adventure: They tend to have steps that consumers are already familiar with – such as dicing onions or chopping garlic – but kits like those at New Seasons seek to have consumers do something different, such as prepare a turnip or roast a half chicken.

Marketing Strategy

While the meal kits are not in each New Season brick-and-mortar location yet, the grocer is planning on having them in each of their stores by August 1. The challenge is to find space for them in the stores and reset merchandise: The shelves are, as it is, already jam-packed. As a result, the grocer has had to do some stock-keeping unit (SKU) rationalization and reposition items on the grab-and-go shelf. It’s hard work, Hardin said – teams have even had to go in at 4:00 a.m. to reset the shelves. And, to get the word out, the grocer’s marketing team has used methods such as in-store signage.

The grocer is also looking at a cross-merchandising strategy. Through a mobile refrigerated unit (MRU), grocers like New Seasons Market can position products by produce or meat or even in the entryway, as “not everyone knows we have them yet.” Even so, New Seasons is careful not to promote the products too much – yet, as they don’t want to disappoint customers. By promoting the kits too early, grocers run the risk of having customers visit their favorite locations to purchase meal kits and not find them in stock.

Beyond New Seasons, all sorts of grocers are bringing meal kits – once traditionally available through subscription services – into stores. Albertsons, for example, is now planning to offer the company’s meal kits in “hundreds” of its stores after acquiring Plated last year. Customers will also be able to order the kits for delivery via Instacart, CNBC reported. In addition, Walmart has begun selling meal kits and “one-step meals” in more than 250 of its brick-and-mortar stores. The retailer plans to bring the meals to 2,000 of its locations in 2018, CNBC has reported.

Whether through New Seasons, Albertsons or Walmart, the latest rollouts show that meal kits are becoming a part of the grocery aisle – and providing flexibility and unique options along the way.