The rationale behind the whole 'home meal replacement' strategy of the 1990's was essentially this: Other forms of business, primarily fast food and other foodservice operators, were taking sales away from supermarkets as people were increasingly buying and consuming foods away from home.
The response, largely consisting of rotisserie chicken, sub (grinder, hoagies, 'Po Boys or other regional designation) sandwiches and salad bars, was for many (okay, we mean most) grocers a dismal failure as large numbers of consumers dined on dashboards, ordered take-out or had food delivered to home or office from other sources.
Somewhere in the midst of this, grocers began waving the white flag and reverted to a distinct "if we can't beat them, conjoin them" approach. Yes, supermarkets held onto the rotisserie chicken, prepared subs, hoagies, grinders, et. al. and salad bars, but many brought the competitors in-house with leased spaces for McDonald's, Pizza Hut, Panda House, Starbucks, etc.
During this co-opting phase, as we call it, grocers began to improve prepared foods offerings (only a few, such as Wegmans, however, actually excel) and, in some instances, even took over space previously leased to foodservice competitors. It appeared at the time, looking from the outside in, some had decided with the rise in gas prices and the so-called 9/11 "nesting effect," that there was an opportunity for supermarkets to become the take-out or dashboard dining source of choice for time-pressed and/or cooking-challenged consumers.
It is with this as a background that it becomes all the more startling that grocers continue to add to the top and bottom line performance of competitors such as White Castle, Taco Bell, Nathan's, Boston Market, T.G.I Friday's, Home Run Inn Pizza, Mystic Pizza, Carvel, Dunkin' Donuts, Morton's, Carnegie Deli, Wild Oats and now Subway Restaurants.
Granted, licensing an established brand and repackaging it for sale in a competitive format is a brilliant strategy on the part of the trademark and the manufacturer marketing and selling the product. What, however, does it do for the brand equity of the retail seller? How does a consumer walking up to a service deli counter and asking for Subway Virginia ham at Pathmark do anything other than let everyone within earshot know this customer believes Subway's brand is better than the "ChefMark" (Pathmark's private label) alternative?
We just don't get it. Of course, we never had and, ultimately, we probably never will.
Discussion Questions: Why are supermarkets taking on items labeled prominently competitors' brands? What would happen if grocers, convenience stores and other food retailers just said, "No"? Shouldn't grocers, at the very least, agree to take on the products only if they are co-branded, as Costco does with a number of manufacturers?