Packer Insight - Challenges for retailers doing meal kits

LAS VEGAS — Meal kits.

A year and a half ago, every retailer I knew was trying to figure out how to jump on this before it got left behind. 

The flashy subscription guys and their bloated marketing budgets had everyone in awe of the idea, the possibility of exploring the culinary landscape, “teaching” millennials how to cook and offering the convenience we all think everyone wants. But subscription has retention, logistics, high cost and value-perception problems.

Enter grocery? One would think a retailer would have an easier go of it, without having to deal with some of the bigger hurdles faced by the mail order and delivery models.

But after a session I attended at the National Grocers Association Show, ironically titled “How to Assemble a Winning Meal Kits Program,” I’m not so sure.

I say ironic and I mean ironic because neither of the retailers on the panel were actually “winning” at meal kits — and they readily admitted it.

d'agostino's meal kits
This is D'Agostino's meal kit set-up, with the kits assembled in-store and merchandised in the meat case. (Photo by D'Agostino's, lifted from the NGA presentation)

Nick D’Agostino, president and CEO of D’Agostino’s Supermarket, a 10-store chain in the heart of New York City, and Kristie Mauer, store director of Mauer’s Market, Wisconsin Dells, Wis., talked about the challenges their operations faced implementing meal kits.

As the presentations drew on, I waited for the challenges to turn into success stories, but this was no Hollywood feature.

D’Agostino’s has sold fewer than 400 kits since they launched in the fall, and Mauer’s Market spent time and resources creating its own kit strategy, from recipe development to packaging and product placement, only to scrap their program in favor of a turn-key solution from Freshop, the same solution used by D’Agostino’s.

Wait a minute. A 10-store chain in one of the most densely-populated cities in the U.S. sold fewer than 400 units of meal kits in four months?

D’Agostino said his company believes this can work.

“We’re going at this as hard as we can, and we’re going to be successful,” he said, but they haven’t figured out the strategy.

D’Agostino’s merchandises the kits in the meat department, where there was space. They often feature things like packaged salad to accompany the meals. I, however, most often see them in produce or with prepared foods. Maybe that’s the key to success, I thought.

maurers market
Maurer's Market puts the meal kits in near the value-added produce and other grab n' go items. (photo by Maurer's Market, lifted from the NGA presentation)

Mauer crushed that for me. Her meal kits are in a cooler with other grab-and-go meal solutions, with the value-added vegetables on the other side. She didn’t share sales numbers, but she didn’t indicate her program was growing like gangbusters, either.

But I don’t think retailers are ready to give up on the concept. Kroger has expanded Prep + Pared to other divisions, Albertsons bought Plated, Amazon has in-house and Martha Stewart’s Marley Spoon, Costco’s got Chef Meal Kits from True Food Innovations and Supervalu just won an NGA Creative Choice Award for its Quick & Easy line.

There’s something here for retailers, but it’s not going to be easy.  

Bonus: The boys and I tried H-E-B's Meal Simple Kits. See what we thought in Pamela's Kitchen. 

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