Grocery Headquarters

King, Dictator and the Bottom Line

Nov 1997 v63 n11 p6(1)

(supermarket marketing)(Editorial)

Bob Gatty

COPYRIGHT 1997 Delta Communications Inc.

Futurist William Knoke says the supermarket customer isn't king any more, but instead is now the "dictator." Consumers, he believes, know what they want more than ever and aren't settling for anything less. (See "Enter the dictator," pg. 20.)

Is that true? What does this mean for the supermarket? How does it affect the demand for home meal replacement (HMR) products?

Some executives who heard Knoke speak at the recent Food Distributors International executive conference in Bermuda agree. Today's customer is more in charge than ever.

Certainly, there are increasing numbers of two wage-earning households who don't have time to kill wandering around a supermarket and need convenience - now.

But these consumer needs can be turned to an advantage by the operator who effectively uses technology to manage categories and market and promote.

"I believe retailers will be turning their attention to customer-specific marketing much more than in the past," says Bill May, vice president for marketing and MIS at the Nash Finch Co.

Jeffrey Noddle, executive vice president at Supervalu Inc., adds, "I don't think it makes any difference whether you call them king or dictator. ... Consumers are always going to vote with their dollars."

Retailers have understood for some time that they cannot shove deals down customers' throats; they must provide products shoppers want.

Thus, the question: Do shoppers really want their supermarkets turned into cafeterias, takeout restaurants, or cafes? And if supermarkets perceive they do, can they further influence consumer behavior to make offerings successful?

Some industry experts believe foodservice is critical to the success of most supermarket operations. But is it overblown hype? Is it a road to success? Or to disaster?

The Food Marketing Institute (FMI) reported at its MealSolutions '97 convention that Americans now carry out more meals than they eat in restaurants. Home is the destination for 77 percent of these meals; with dinner brought home most often.

Households buying take-home dinners include those with employed females, a young head of household, three or more persons, or those in the middle-to-upper income brackets.

FMI says the primary audience supermarkets can cultivate is the one-third of households that purchase a take-home dinner from restaurants at least five times in eight weeks. These heavy users include childless couples under the age of 45; two wage-earner families; and two-parent, single wage-earner households.

But, FMI cautions, when supermarket operators develop meal solution programs, they must remember that 96 percent of shoppers who eat their main daily meal at home prepare it at home. For every meal bought away from home, nearly four are prepared there.

Balance is required. Supermarket executives should be cognizant of the trends, which show increasing numbers of people don't want to cook. But what does that mean?

Do they want to sit down in a supermarket and have dinner? Do they want to spend nearly as much for a cold or reheated commissary-prepared meal as they would for a sit-down restaurant dinner served by a waiter on real dishes they won't have to wash?

If the consumer is king, or even dictator, what does he or she want? It is critical to find out. Perhaps behavior can be influenced. But before stores are revamped, categories restructured, and investments made, it would seem a good idea to determine what shoppers are actually saying. Indeed, it's essential to focus sharply on the real meal solution.