Home meal replacement (HMR) is pushing grocery retail into a new era according to research firm Mintel, with 85% of Canadians having purchased prepared or made-to-order foods at a grocery store in the past three months.
The growth of the HMR segment is being driven by the combination of quality and affordability, with more than one-third of Canadians (36%) saying today’s products are a viable alternative to restaurant or takeout food, and more than one-quarter (27%) saying they provide a cheaper alternative.
More than 40% of consumers surveyed by Mintel said they purchase HMR because they are already shopping in the store, while 34% said it was because they are hungry while out of the house. Forty-four per cent of respondents said they purchase prepared and made-to-order foods because they don’t want to cook.
Joel Gregoire, senior food and drink analyst at Mintel, says it is no longer sufficient for HMR to be a simple extension of the deli counter. He says grocery stores must evolve to offer customers an eat-in experience that rivals that of the foodservice industry.
“The grocery shopping experience has really changed and experience has come more into play, and I think that’s really going to have an impact on how stores are laid out and where the emphasis is placed,” says Gregoire. “HMR is core to that.”
The “grocerant” concept provides grocers with a way to increase both traffic and profits in an industry where profits are notoriously tight, says Gregoire.
He cited coffee shops as an example of a retail segment that has successfully reinvented itself to become a “third space” for people to meet, work or simply decompress. Within grocery retail, he calls Italian food market Eataly a “best-in-class” example of how stores can successfully marry the in-store and grocery experiences.
“It’s not only a showcase for the food, but it’s also become a gathering place,” says Gregoire. “Not only can you buy the food and experience the heritage of Italy, but it’s often as packed as any restaurant in the neighbourhood.” Eataly has more than 30 locations in Italy, Japan, Dubai, Turkey, Brazil and the U.S. and will open its first Canadian location in Toronto in 2019.
Gregoire says grocers also have an opportunity to use the HMR section to drive consumers deeper into the store by showcasing specific products or ingredients used in the meal preparation.
A quarter of respondents (26%) said the store’s HMR section made them want to explore. “It’s kind of a conduit to the rest of the store,” says Gregoire.