Dive Brief:
- In the wake of Amazon’s acquisition of Whole Foods, supermarkets need to be “more exciting,” Ahold Delhaize CEO Dick Boer told Bloomberg. For this reason, he said Ahold Delhaize may begin adding restaurants and other entertaining add-ons to its stores.
- Boer predicts that by 2025, 15% of all grocery purchases will happen online. Still, he said that even though online grocery is growing quickly, most consumers prepare to do their shopping in stores, especially for meat and produce.
- Addressing Albertsons purchase of Plated and the economic challenges meal kit companies face, Boer said these players will continue to struggle without some sort of retail store presence.
Dive Insight:
Ahold Delhaize is known in the industry as a company that operates well-run conventional supermarkets. Since the merger between its two principal entities last year, the retailer has saved millions in cost efficiencies, and over the next three years expects to see €750 million ($880 million) in synergies between the combined companies.
But according to CEO Dick Boer, Ahold Delhaize needs to be much more than efficient — and much more than conventional, for that matter. To draw more customers to its Stop & Shop, Hannaford, Food Lion and other retail banners, the grocery conglomerate needs to add restaurants and other fun destinations for customers.
“We have to make the store more exciting,” Boer told Bloomberg. “The shopping environment needs to be easier, less complex and more entertaining.”
Does this mean we’ll see burger bars inside Stop & Shops or sushi restaurants inside Hannaford stores? The idea isn’t as farfetched as it once seemed. Retailers from Hy-Vee to Wegmans and Whole Foods are adding bars and restaurants to their locations. Not only do these destinations offer high-margin food and drink items, but they can also build a positive image for a retailer, encourage shoppers to visit more often and to stay longer (and potentially buy more) in stores.
The trick is coming up with an offering that resonates with a store’s customer base. A full restaurant may not be the right fit. Many retailers, including Raley’s and Lucky’s, offer craft beer and wine in their stores. Others hold events like cooking classes and health fairs. The options are numerous, so expect Ahold Delhaize to test the waters sometime in the coming months.
Boer’s insight that meal kit companies need grocery stores to survive also seems to be mostly on target. With dozens of companies duking it out, compounded by high marketing costs, low customer loyalty and elusive profits, these companies need additional sales channels. The question is, will most supermarket chains follow Albertsons' lead and acquire a company, or will they follow Kroger’s lead and develop their own brand? It will be interesting to see how grocers respond to the opportunity this segment holds, and if Ahold Delhaize decides this is an add-on worth pursuing.
