If I am a retailer managing HIGHLY perishable inventory, I will manage for scarcity. I will gladly sell out and adjust inventory levels up, carefully. I will not feel duty bound to satisfy every full margin sale at the risk of being left with inventory that very quickly goes to zero value.

Many grocers do not even attempt to offer a good variety of prepared foods because it is such a strain to keep product both fresh and well-stocked. Those that do a good job have created a prepared foods department and they not only look after the product full-time but in many cases prepare product on site.

The stores that attempt to offer prepared food as a side-line to the deli or meat or even dairy departments are doomed to failure and that has been what the author has been seeing on his tour of stores. It is truly an all-in or not-at-all decision that needs to happen!

Prepared foods are common in the U.K. and serious out-of-stocks are rare. Sure if you go shop at the end of the day then there is less choice, but there are still options.

Part of the problem with the U.S. market is that, unlike the U.K., the prepared foods category is not as mature nor as stable. This has made it much more difficult to assess demand. It also means there are fewer products in the category so out-of-stocks are more common.

It is imperative that retailers integrate technology to proactively monitor AND manage inventory of time-sensitive prepared meal items. I like to idea that Anne noted — retailers creating a scheduled pattern of prepared meals, not unlike daily soup specials at diners. Customers learn that Thursdays will be chili and Fridays might be clam chowder (New England of course!). Using active monitoring and management technology, retailers will learn which items are popular as well as managing inventory to match demand — increasing the value to both customers and the retailers.

I shop Mariano’s frequently and find that their replenishment strategy is very strong. The associates seem extremely vigilant in surveying product movement. I believe those who are responsible for replenishment must be trained to anticipate product movement and then have the authority to take action. As an aside, I once asked one of the associates at Mariano’s how he knew what he would need in the next hour, and his response was: “Trust me, I know! This is my show!” It all comes down to people.

Grocers have rushed to join the bandwagon of the hot trend of meal kits and many are still working out the finer details. There are a lot of moving parts that need to be perfected to do meal kits well and to price the correctly.

Forecasting demand is one of the big challenges, especially as you introduce new kits. The labor to assemble meal kits is another challenge and to me is the key ingredient here. Retailer have been reducing headcount at stores for years and this trend creates a labor intensive conundrum. How do I maintain margins while increasing labor to service kit demand (as labor costs are skyrocketing via minimum wage legislation)?

Food safety is another challenge. For meal kits that include meats and fresh produce, retailers need to continue to monitor temperatures and freshness to ensure products are safe.

While there are challenges, retailers will figure it out, as it is what many busy consumers want!

The retailers must make an honest commitment to this category. That means short shelf-life codes to help ensure freshness, enough on-shelf to ensure in-stock conditions and production management activities to monitor category performance everyday. All of that takes enormous labor and product resources… more than most want to commit. That’s the issue.

Two interesting articles today: Burberry disposing of excess, and grab and go that came and went. The idea that for any product or promotion you can stay in-stock until the very last minute and then magically get the inventory position to zero, without some kind of clearance or disposal, defies math. To be controversial, there’s nothing wrong with selling everything that you planned and bought at full price, and bringing in something new to replace it. If a retailer can retrain their customers to shop early and often they have an (alternative) path to success.

Prepared foods need someone who continually manages, monitors and restocks. Usually this requires at least two people and most grocers won’t dedicate this to such a high demand area, with ebbs and flows, as well as difficult to manage inventory, when they have a full store that continually demands attention, customer service, restocking and out-of-stock elimination.

Zero waste is unheard of and, when you’re understocked as suggested, it sounds like a business opportunity. For prepared foods, several folks on this thread already covered the basics — resources, dedicated staff, and consistent assortments. I loved Warren’s comments that the “meal kit delivery companies – and the lemmings that followed them – will soon be extinct … ” Meal kits are an immediate need.

It is amazing that when so many retailers are complaining about how hard it is to compete with online retailers, they do not get the basics of retail right. Good in-store availability is key and Grab and Go meal kits are hot at the moment, so you need to ensure that you have the product on the shelf to build loyalty and customer traffic on a regular repeat basis. One of the main problems with staying in-stock with these types of items is the fear of high shrinkage. Also the age of many retailers supply chain and inventory management solutions mean they lack the capability to deal with this category. Most of the older solutions can’t do forecasting at item and store level but look at store order history and use this to forecast future demand. This is useless in a fast moving environment like food and particularly so in an new growth area like Grab and Go meal kits. Every store will have a different ethnic, socio-economic, age and weather profile so one size… Read more »

Running a prepared foods department can be a daunting task, and there is no one-size-fits-all blueprint for each store. The local gas station/truck stop food is a fast paced world of pre-made heat and eat foods, that cater to grab & go customers, who need a quick fix, which includes pre packed sandwiches that need daily monitoring. The margins are high to allow for shrink and if maintained properly, it can be a simple way to provide products to your customers. If you decide to prepare homemade foods on site, than you are in a whole different world, and it takes a long time to learn the ins and outs of this concept. The rewards are greater, but it must be done with trained staff that follow the recipe to a “T”, and a tight control of inventory, dates, sanitation laws, and proper selling techniques. Been doing this for years and I love the daily challenges, but it is very hard work to get it right. Whichever model you choose, stay committed to freshness and… Read more »

I would suggest turning a negative into a positive. The reason we are out of your favorite item is if it is not fresh, we don’t sell it. Shop early or order online to make sure you get your favorite meal before we run out.

I think that many retailers are hesitating to offer grab and go style foods due to this fact alone – it’s very difficult to anticipate what needs to be prepared and when. There’s a lot of planning that needs to go on when it comes to prepared food stations. What are we going to offer? What days/times will we offer that food? How much time do we need to prepare that food? And so on. However, there are ways to combat these daunting questions. One would be providing shoppers with a fixed menu. Over the first few weeks of those offerings, retailers should have a good idea of which items are more popular and which they can cut back on producing. Another would be to have a whole team dedicated to the prepared food section, where they not only plan and organize the offerings, but also actually cook or prepare the food. As extra time in our day seems to shrink more and more, the desire for prepared foods will only increase. Those retailers that… Read more »