The retail news remains full of stories about restaurants, fast casual in particular, being one of the fastest growing retail segments. Add to that the onslaught of grocery stores popping up everywhere and it seems you can get food almost anywhere these days.
From dollar stores to banks to apparel stores, more and more non-food retailers are catching on to the fact that a food offering can increase store sales and serve as a way to differentiate.
A few years back dollar stores began adding more grocery and fresh food items in order to compete with grocers and mass merchandisers like Walmart. Dollar Tree, Dollar General, Family Dollar and Big Lots have all expanded food offerings and have experienced increased same-store sales as a result.
Drug stores got into the act as well. CVS began expanding grocery offerings back in 2011. More recently, Canadian drug store chain Shoppers Drug Mart is testing six pilot locations in Toronto to test new fresh food merchanidse.
Hungry after a long day of shopping for clothes at Tommy Bahama, camping gear at Bass Pro or Cabela’s, or even a car at your local Honda dealership? Walk just a few feet and grab yourself some grub. Each of these retailers offers a branded cafe or restaurant in or near their stores.
Even banks want you to be full while being financed. Capital One, for example, is testing a concept called Capital One 360 Cafe. Locations can be found in Boston, Chicago, New York, Philadelphia, St. Cloud, MN, San Francisco and Los Angeles. These bank branches include coffee shops, flexible and open workspaces, free WiFi, oh, and a full-service bank as well.
“They call it ‘Sipping and Saving,'” said Ron Dowhaniuk, senior vice president and regional director in SRS’ Portland, Oregon office. “This is a casual way for Capital One to introduce their banking services to the masses without opening a bank branch.”
Even food retailers are finding more ways to sell. While grocery stores have featured dining areas for years, some grocery companies are taking it up a notch. Whole Foods is adding bars and restaurants, hoping to keep customers in the store longer and give them more reasons to buy. According to their most recent annual report, “Some stores also offer sit-down wine bars and tap rooms featuring local and/or craft beer and wine, creating a destination for customer gathering. We believe our stores play a unique role as a third place, besides the home and office, where people can gather, interact and learn while at the same time discovering the many joys of eating and sharing food.”
Similar to the in-grocery restaurant/bar, welcome the “grocerant.” According to Steven Johnson, the grocerant guru, grocerant fare is “a food item that is ready to eat or ready to heat. In grocery stores, these items can be found in the deli/lifestyle section, or designated buffet or walk-up ordering area.”
Eataly is an example of a grocerant. The stores offer grocery items as well as ready-to-eat and take-out. The concept is growing rapidly as a response to consumer trends.
According to this article by Marianne Quinlan-Sacksteder, “Contrary to some reports, eating at home is not passe. Rather, it has evolved to meet the needs of busier lifestyles, more sophisticated palates, and consumers who have become accustomed to immediate gratification.”
In-store dining is one of the fastest-growing trends in the grocery industry, according to research company NPD Group. Sales of prepared foods, which include in-store and takeout dining, are up by nearly 30 percent since 2008. Convenience stores are also seeing benefits as NPD reports that meals served at convenience stores increased by 3.1% during the 12-month period ending August 2014. This compares with a 0.4% decline at restaurants.
At last year’s National Restaurant Association Restaurant-Hotel-Motel Show, a panel of industry experts discussed the growth and impact of grocerants on the restaurant industry. Bill Cross, SVP for business development at Broad Street Licensing Group, said, “By 4:00 p.m. each day, 80% of consumers don’t know what they’re going to have for dinner. They’re finding supermarkets and other non-traditional food sources to be more convenient than restaurants to buy a hot entree to take home.”
To be sure, grocery stores have benefited from the increased attention on in-store and take-out dining. This Wall Street Journal article states that sales of prepared foods at Whole Foods Market increased from $1.3 billion in 2007 to $2.7 billion last year. That number is inching closer and closer to total annual sales for some fast casual restaurants.
Here’s an idea for the U.S. Postal Service: add a cafe!
Written by Janie French, Director of Business Development