While the events of 2020 threw a wrench into society, the increased focus on investing in the perimeter of the grocery store – fresh prepared foods – is one of the most interesting growth areas for U.S. grocers.
The lines of retail and foodservice have been blurring as grocers realize there is a golden opportunity to capitalize on consumers’ desire for fresh prepared foods and drive foot traffic. The growth of retail prepared foods is expected to reach $36 billion in 2021 on growth of 5-6%, which makes it one of the brightest segments in foodservice.
Leaders Such as Publix, Hyvee Flourished During Pandemic
Some supermarkets may have eased off on the prepared foods during the pandemic, but others charged ahead:
- Publix, one of the leaders in prepared foods, saw sharp increases in demand for their famous sandwiches, such as the Havana Bolds and the Chicken Cordon Bleus, all of which could be ordered in advance through the app for in-store pickup.
- Hy-Vee went into overdrive with its home delivery service, offering curbside delivery of their exceedingly popular homestyle prepared meals.
- Costco sold more than 100 million of its rotisserie chickens last year alone when we were cooking and eating at home more than ever, thanks to a feed mill, hatchery, and processing plant in Nebraska dedicated specifically to this iconic food. It’s a safe assumption that the ever-popular staple will be a best-seller in 2021, too.
A Number of Societal Factors Bode Well for Retail Prepared Foods
Prior to the pandemic, there were a confluence of factors that were changing the way shoppers purchased prepared food. We believe these factors have staying power and will continue to drive strong growth during the decade:
Trends Contributing to Strong Retail Prepared Foods Growth in the U.S. Post-Covid
|Health and Wellness||Not at all a new idea, yet consumers continue to search for “clean, organic, natural” and other markers of healthy options.|
|Convenience Needs||Snacking and grazing have only picked up during the pandemic.|
|Foodservice “In-Store”||Increased desire for ready-to-eat options by shoppers has elevated culinary innovation, flavor and variety.|
|Eating Away-from-Home||There are signs that away-from-home eating and prepared foods are retaking share from retail purchasing, and we expect it only to sharply increase in 2021.|
|Shopping In Store Perimeter||Overall grocery trips were on the decline prior to the pandemic, but trips to purchase prepared foods were on the rise. We expect a return to pre-pandemic levels.|
As one of the fastest growing segments in foodservice with high consumer demand, food companies may want to evaluate the possibilities of entering and/or expanding into the channel. As the pandemic winds down, manufacturers will require the intelligence necessary to capture the opportunities in the fast-growing retail foodservice segment to ensure focused strategies and channel risks.
If you are looking for a fresh strategy, please see our services for Covid-19 planning.
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