Why millennials are leading the way in prepared foods
More than 75 million strong, millennials are now the largest generational demographic in the U.S. And many of them want to know: What’s for dinner?
According to a recent report by the U.S. Department of Agriculture’s Economic Research Service, millennials spend a higher percentage of their food budgets — around 6% — eating away from home than any other generation. In a survey gauging consumers’ purchasing habits, the agency found that 62% of millennials had purchased deli prepared foods, restaurant delivery or fast food, compared 56% of Gen Xers and 59% of baby boomers.
Grocers clearly have an opportunity to connect with these coveted shoppers through their prepared food selections. But it takes more than just the usual offerings to entice them, according to sources interviewed by Food Dive.
Make it unique and interesting
Rachael Perron, culinary and brand director for Minnesota-based grocery chain Kowalski’s Markets, said in her experience, millennials have high standards for quality and transparency when it comes to prepared foods.
“A lot of younger customers put more value on their food,” she told Food Dive. “Millennials insist on understanding where their food comes from, what makes it unique, and what points of distinction make this something they should be interested in."
On the plus side, she said, they’re willing to spend more money to buy items that deliver on those qualities.
To reach young consumers and others interested in unique options, Kowalski’s offers a variety of exclusive sandwich, soup and salad options — including a cashew chicken wrap, sushi roll sampler trays and a cranberry, feta and toasted walnut salad.
Millennials area also very interested in ethnic cuisine, Perron said. Thai chicken chowder, aromatic poached sea bass and coconut milk are just a few of the ingredients the grocer works into its prepared foods.
Across the U.S., grocers are connecting with consumers of all ages with prepared foods featuring Hispanic, Asian and other global cuisines. Wegmans, a chain renowned for its prepared foods, offers a “Tastes of Mexico” line with selections like chicken mole with Mexi-kale salad. Eataly, the grocer that carries Italian specialties and foodservice stations, has popped up in major cities, while Hmart, the U.S.’s largest Asian supermarket chain, recently opened its first in-store food hall, featuring ten different Korean eateries.
Millennials certainly want food that tastes good and that is made from fresh ingredients, but they also value convenience highly, said Bonnie Riggs, food industry analyst with NPD Group.
“Consumers are just starved for time,” she said. “You’d think with all of these technological advances, we’d have more time, but what it’s done is just speed everything up and we’re even more starved for time,” she said.
New services and meal formats
As demand for inventive meal options has grown, grocers have branched out into new services and store formats that resonate with millennials.
In-store restaurants and bars have become more commonplace, with grocers like Whole Foods and Hy-Vee featuring table-service meals and craft beers on tap. A growing number of supermarkets have also begun stocking meal kits in their prepared foods departments — a move that targets a service popular with young consumers. According to a survey conducted last year by technology firm Fluent LLC, 24% of millennials said they subscribe to a meal kit service, the highest percentage among any demographic.
Grocery store meal kits are “game changers” Riggs says, and may help the popular channel reach its growth potential.
“Millennials insist on understanding where their food comes from, what makes it unique, and what points of distinction make this something they should be interested in."
Culinary and brand director for Kowalski’s Markets
Of course, meal kits aren’t the only way grocers can offer personalized prepared options. At Kroger-owned Mariano’s, for example, shoppers can select their fresh cut of meat, season it with spices from the fresh spice department, and have it grilled to their specifications in-store.
At the same time, grocers need to consider innovative packaging that can keep up with millennials’ demands for sustainability and convenience, Riggs said.
A common criticism leveled against meal kits is that they use too much packaging, with ingredients often wrapped individually and unrecyclable gel packs stuffed inside to keep everything cool. Grocery meal kits don’t require boxes, Styrofoam and cooling packs, but companies are still mindful of the issue. Kroger and Whole Foods have both tested kits that require less packaging than normal.
According to a Nielsen survey from 2015, 66% of millennials say they’re willing to pay more for sustainable products.
As home delivery becomes increasingly popular, the need for effective packaging that keeps foods hot or cold becomes increasingly important. This is another area poised for change in both the restaurant and grocery industry, says Riggs.
“If you’re ordering delivery or bringing a meal that’s prepared at home, it has to travel well,” she said. “We have not cracked that nut yet.”
Navigating competition and marketing effectively
Restaurants have always posed a threat to supermarket prepared food sales, but in recent years grocers have been winning the battle as their prepared selections have taken off while restaurant spending has cooled.
However, app-based delivery services like GrubHub and Uber Eats are helping restaurants fight back by dialing up the convenience factor. Delivery has grown 20% over the past five years, according to NPD research, mainly thanks to digital ordering. In addition, digital platforms are growing restaurant delivery beyond dinner — the most popular daypart for delivery — into lunch and breakfast.
“That’s changing the whole industry in terms of providing opportunity,” Riggs said. “That space is going to get pretty crowded quickly.”
Home delivery through services like Instacart and Shipt are making grocers more competitive with the likes of GrubHub, but retailers need to make sure they’re promoting their meal offerings effectively, said Perron.
Kowalski’s focuses on educating all interested shoppers — but especially millennials — on food through the traditional in-store magazine, and electronic device-friendly resources, including videos, recipe cards, and posts on social media. Contrary to popular belief, the digital generation craves interaction, and appreciates the multitude of Kowalski’s themed in-store events, such as spotlights on local producers, private label products, brunch or summer entertaining ideas and daily food demos, Perron said.
“Millennial shoppers still do value those in-person connections,” she explained.
Grocers should take care not to alienate their younger and older consumers in their quest to cater to millennials, Perron said. Kowalski’s makes a conscious effort to keep traditional offerings like chicken and wild rice soup, rotisserie chicken, chocolate chip cookies and classic sirloin will always be on the menu, she said.
But Perron finds that millennial shoppers are trendsetters, and that what they enjoy quickly becomes what everyone else demands.
“Millennials are leading the way,” Perron said. “As new products come into our store, we find older shoppers, who weren’t driving the bus, want to get on board. Millennials are driving it, so we’re jumping on board with them.”