BrainTrust Query: What's Holding Back Innovation of the Supermarket?
By Bill Bishop, Chairman, Willard Bishop
While a number of leading retailers are becoming more customer-centered and, as a result, generating relatively stronger same-store sales, there's a lingering concern in some quarters that supermarket retailers are still not as good as they need to be when it comes to spotting and adopting innovation.
This position is supported by the fact that supermarkets were late to embrace the natural and organic trade, while Whole Foods, Wild Oats, and a number of other operators were quicker to pick up on the popularity of this class of products.
The position is also supported by the typical reluctance of supermarkets to be first in implementing new technology - a trend technology suppliers find to be a very challenging "Catch 22."
As an example, let's consider a food retailing innovation that's experiencing strong growth in many areas of the country: the meal-assembly kitchen. This is a niche business that's growing up between traditional grocers and fast-food/casual dining carryout. It's also a business that caters to customers who are "short on time and long on home-style cravings," according to a May 20 article in the Daily Herald, a publication of the northwest suburbs of Chicago.
The article featured Julie Duffy, founder of Dinner by Design, based in Grayslake, IL, with 56 franchises operating in 12 states. Ms. Duffy explains that her company is built to serve shoppers who "don't want to go through the shopping, chopping, and mopping" typically associated with a home-cooked meal.
Dinner by Design culinary experts develop and test recipes that are regularly posted on monthly menus followed by all of their franchisees.
Recently, Dinner by Design partnered with Kraft and Sara Lee, which provides them with additional promotional dollars as well as broader exposure.
Beyond the practical benefits of this innovation, there are the social benefits. "This is the new-age quilting bee," says Duffy.
Five-year old Dinner by Design generates 70 percent of the company's business through its website, which is logging more than 40,000 hits per day. And, Dinner by Design, in fact, is not even the largest of these businesses, even though in 2006 their current revenue topped $8 million done with just 21 employees.
Dream Dinners, for example, follows the same premise in its network of 260 franchises across 33 states.
This so-called "make, take, and bake" retail food business seems to be an innovation that's long overdue for careful evaluation and testing by traditional food retailers. It's on trend with meal solutions for one of the most coveted demographic segments of the food business. So far, there have been only a few tests to integrate this concept into the supermarket, such as Publix Apron's Make-Ahead Meals stores in two Florida locations. (See RetailWire 5/18/07 - Publix Opens Make-Ahead Meal Assembly Stores) But certainly, the opportunity hasn't generated broad attention.
Discussion Questions: Respondents are asked to focus on just one of the following questions:
- Do you see meal assembly as an innovation with the potential to be adopted by food retailers? If yes, why? If no, why not?
- What is it about the way food retailers look at innovation that tends to discourage them from embracing it?
- What needs to be done to accelerate food retail industry adoption of innovations? What can be done by progressive food retailers? What can be done by developers/marketers of innovations?